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Money BoC rate hike has both pros and cons

13:31  12 july  2018
13:31  12 july  2018 Source:   msn.com

Tariffs, mortgage rules key to Bank of Canada rate decision: Poloz

  Tariffs, mortgage rules key to Bank of Canada rate decision: Poloz The effects of U.S. steel and aluminum tariffs and tighter mortgage rules will "figure prominently" in the Bank of Canada's July decision on interest rates, Governor Stephen Poloz said on Wednesday. In a speech promising increased transparency from the central bank in an age of economic uncertainty, Poloz said there was "a litany of things we simply do not know" these days, which is why the bank is "particularly data-dependent" right now.With the next rate decision set for July 11, Poloz said the bank was working to incorporate in its projections the effects of U.S.

Impact that the BoC rate decision has had on USD/CAD during the last meeting. The pros and cons of a Fed interest rate hike - CBS News Both exchange rates are higher than they were before the BoC ’s announcement. The market thinks the BoC will hike but has largely chosen to react to the

Impact that the BoC rate decision has had on USD/CAD during the last meeting. The pros and cons of a Fed interest rate hike - CBS News Both exchange rates are higher than they were before the BoC ’s announcement. The market thinks the BoC will hike but has largely chosen to react to the

a close up of a building© Provided by thecanadianpress.com The Bank of Canada's latest interest rate hike means higher borrowing costs for consumers with variable-rate mortgages, loans or lines of credit, but it is also good news for savers and future homeowners.

The decision to increase its benchmark interest rate to 1.5 per cent on Wednesday prompted all of Canada's Big Six banks to raise their prime rates, thereby passing the rate increase along to their customers.

Those with variable-rate mortgages will now face higher interest payments, a concern for many Canadian households that are already saddled with hefty debt loads, said Samantha Brookes, chief executive officer of brokerage Mortgages of Canada.

Bank of Canada's Poloz keeps markets guessing on July rate move

  Bank of Canada's Poloz keeps markets guessing on July rate move Bank of Canada's Poloz keeps markets guessing on July rate moveLoad Error

The overnight lending rate is the key policy tool that the central bank has at its disposal, and higher rates signal that the bank is taking on a more restrictive stance. Statistics Canada says Canadians are on track to spend almost billion on pot this year, as consumption of both legal and illegal

The Federal Reserve has all but broadcast its intention to hike its benchmark interest rate for the first time in nearly a decade come Wednesday, and most Fed watchers view an increase to 0.25 percent from the current zero percent a near certainty.

"Increasing rates just really limit how much they have available to them on a monthly basis," she said.

The prime lending rate is the rate that banks use to set interest rates for variable-rate mortgages and other loans. Wednesday's rate hike was the central bank's first interest rate move in six months and lifted the trend-setting rate to 1.5 per cent, up from 1.25 per cent. It also marked the bank's fourth increase over the last 12 months and the first time the rate has been this high since December 2008.

The central bank's move was driven by the strength of Canada's economy, which it expects will remain resilient despite headwinds from trade tensions with the U.S.

After the central bank's announcement, Royal Bank of Canada, TD Canada Trust, Bank of Montreal, Bank of Nova Scotia, Canadian Imperial Bank of Commerce and National Bank all said they will increase their prime rate by a quarter of a percentage point to 3.70 per cent, effective Thursday.

Poloz widely expected to raise rate this week

  Poloz widely expected to raise rate this week After waiting for half a year, Stephen Poloz appears ready to get back on his rate-hiking path this week. Recent signals from the Bank of Canada governor, combined with strong economic data, have experts widely predicting Poloz will raise his trend-setting rate Wednesday from its current level of 1.25 per cent.

BoC Senior Deputy Governor Carolyn Wilkins delivered “An Update on Canada’s Economic Resilience” yesterday. The most important part of the speech is that In short, Wilkins suggested that BoC is still on course for further rate hikes despite uncertainty of NAFTA negotiations. And that gave a nod to

Both exchange rates are higher than they were before the BoC ’s announcement. “At the same time, the effect of 2017’s two quarter-point rate hikes is already being felt by Canadian households.” “We have been (and remain) on the low-end of the consensus expectation for short-term rates in Canada.

The rates had previously been set at 3.45 per cent.

The increase raises the cost of borrowing for customers with variable-rate loans, but people with money socked away in savings accounts and guaranteed investment certificates will benefit, said Scott Hannah, the president and chief executive of the Credit Counselling Society.

"It helps seniors who depend on interest income to help fund their retirement expenses," he said. "And the rate hikes are keeping Canadians focused on the need to curb their appetite for debt and pay down the debt they have."

Higher interest rates, along with stricter mortgage rules, have also helped to cool down the country's real estate markets, helping future homeowners, Hannah said. It's unwelcome news, however, for those looking to renew their mortgages this year, he added.

Overall, the impact of the latest rate hike will be modest for consumers, said Meny Grauman, an analyst with Cormark Securities Inc. The rate hike is in reaction to a healthy Canadian economy, which is beneficial, he added.

Rates are slowly on the way up, but remain relatively low historically, Grauman added.

"On balance, it's still probably a positive for the average household, for the average business."

Is the rate hike bad news for these 3 stocks? .
Canadian Pacific Railway Limited (TSX:CP)(NYSE:CP) and other companies sensitive to foreign exchange fluctuations may not be welcoming another rate hike.Renewed trade tensions and calls for further protectionism pushed up the U.S. dollar, which, in turn, dragged down the Canadian dollar. Governor Stephen Poloz said that there would likely be one more rate hike in 2018, but he also urged caution due to this recent bout of protectionism. Experts forecast that the central bank will leave rates unchanged until a key October meeting.

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