Broker channel economist: Record-low interest rates are here to stay and the economy is stronger than you think.
“So you want to know where interest rates are headed then listen to the Bank of Canada – and it’s saying no interest rate hike in 2016. There’s no need for one,” Michael Campbell, Verico
’s economist, wrote in his latest economic report, which was obtained by MortgageBrokerNews.ca. “There’s no inflationary pressure or demand pressure implying a rate hike. Our manufacturing sector may be recovering but it’s not expanding – hence no upward pressure on rates.”
That’s good news for broker and, indeed, homebuyers; inexpensive mortgages were one of the driving factors that made 2015 one of the best year on record for many industry players.
According to Campbell, the Bank of Canada recognizes the stimulation the low looney has had on the economy and will be in no hurry to thrust the dollar higher by increasing interest rates.
“The bottom line is that The Bank of Canada doesn’t want a stronger dollar until our recovery becomes more secure, especially given the precarious global economic environment,” Campell wrote. “I suspect that in both the States and Canada the central bankers are far more concerned about a global shock impacting their respective economies than anything domestic.”
Also in the report, Campbell shared his bullish outlook for the economy – which is being driven by Vancouver and Toronto.
“The overall economy led by Greater Vancouver and Toronto is far stronger than most people realize,” Campbell wrote. “The only serious trouble spots in Canada are those regions impacted by the massive drop in resource prices – especially oil producing provinces.
“But even in Alberta things may be improving if the 19,000 jobs created in March is not just a one off event.”