What? Wow, that’s early. Due to ECB QE maybe? Wow, shocker. CBs are running wild now!
IMO, it’s more about crude oil.
that’s what they say but i don’t know. if you’re just barely cutting gdp estimates, you expect a rebound in H2 2015 and the dollar is down plenty versus the USD, what’s the point? i mean, folks expected a hike as late as mid-December, now we’re cutting already? wow. not that rates hadn’t already forecasted the change in rate expectations but to cut at the first sign is just nuts. or am i just used to the ECB’s lollygagging for four years that makes me amazed at what real CBing is all about?
It is most definitely due to low inflation (which yes, is driven by crude oil). Or maybe we can say that the low inflation just gives BOC more freedom to cut rates, depreciate CAD, increase economic growth, which they would have liked to do otherwise.
Wow…
No one expected this, CAD is on it’s way down. Oil decline and inflation concerns probably leading the way here. Maybe they’re also trying to prop up the housing market as it’s taking a hit out West.
Canadian consumers are already in way over their heads with debt, and if this leads to more debt fueled spending… this nation is in trouble.
Important note: BoC made this decision assuming oil will average $60 US over the next 2 years.
Fall election kids
^ true that. i take Poloz as a Tory cheerleader.
I bought some oil, intent on holding for several years. Think people are underestimating that the production halting now will result in sudden abrupt spikes when demand starts to pick up.
What do you mean you bought oil? Like you actually have barrels of crude oil?
Doesn’t everyone have a couple tanks in the backyard for a rainy day?
At least in Canada that is how it’s done…
^ i just drive a spike in my backyard and oil starts seeping up. i keep a pool of oil in the backyard year-round. in winters, we turn it into a skating rink. when we play a game, ironically, nobody wants to be the oilers.
^ Hockey on the tailings ponds. Love it.
It’s been the worst era to be a saver.
I’m still surprised at how many smart people I know still talk about inflation. I don’t want to blow my own horn (but I will anyway), but I’ve been mentioning disinflation and deflation and Lost Generation for 7 years now on this board. When will people finally get it: today’s generation will live worse off than their parents and many will be underemployed. The only saving grace for most of them is their parents handing over the house instead of selling it and living it up until their death. Even then, the house will be worth much less than it is today. Low rates will be here for at least another decade. People that don’t get it don’t understand what deleveraging means.
BTW, I would reduce the maximum amortization period to 20 years to avoid more homeowner debt, but I fully understand it’s an election year.
Are you claiming that houses will be worth less than today in the long run? In real or nominal dollars?
I wouldn’t be surprised 10 years from now if we’re at the same nominal prices. Either via “V” shaped correction or a decade of nominal flatness. Under the former scenario, baby boomers might be more willing to give the house to their children instead of selling it under its high water mark.
Inflation will be so low so the difference between nominal and real won’t be big anyways.
^ I agree in the five year horizon. I’m not at all comfortable with the longer term implications of the QE/free money experiment. What’s your portfolio look like if you believe this? Do you plow every saved dollar into a 2.05% 30 year Canada?
You’re not alone mate - China’s been doing it consistently since oil first traded around $60 mark. Got a friend at a physical trading firm and he says biggest orders are coming from govt backed oil corporations in big countries that are net importers of oil, countries like india/china.
though i also believe disinflation will likely last for a very long time, i’m not sure i can claim that this generation will be worse off than the last. maybe in strictly real dollar income terms, yes, but due to technological innovation, even a next generation with lower real incomes will likely live better lives than today. further, in aggregate, being educated and underemployed is better than being uneducated and employed. add a layer of technology, and the future could be better. that said, populist sentiment could very well steal back higher incomes for labour from business anyway so the future could look better for incomes regardless.
In my TFSA and RRSP, 100% equities. I’m 35 years away from retirement and will most likely live another 25 years after retirement if life expectancy continues to increase at its current rate. So you could argue my timeframe is half a century away for a good portion of the funds.
In my shorter term trading accounts, I’m much more conservative and selective. There will be industries and regions that will do better than others in a low inflation, low growth environment.