Another Interest Rate Cut Looming Amid Weak Economy!
Mutterings of interest rate cuts in the near future have intensified amid the latest financial numbers, which pointed to an economy hobbled by weakened consumer spending and a trend of lower prices.
Updated figures released by Statistics Canada on September 23 revealed that the Canadian annual inflation rate declined by 1.1 per cent last month, the most significant drop since October 2015. The core inflation rate also fell from 2.1 per cent to 1.8 per cent, lower than the record set back in July 2014.
With both indicators performing worse than the Bank of Canada’s 2016 inflation target of 2 per cent, analysts voiced fears that interest rates might fall if these trends continue, the Financial Post reported.
“There really isn’t that much to be positive about for the Canadian economy,” Capital Economics chief economist (North America) Paul Ashworth said. “Our view for some time has been that the bank would be forced to cut interest rates.”
“A rate cut would help boost growth, but most of the impact would come by weakening the Canadian dollar further and thereby helping exporters,” CIBC World Markets chief economist Avery Shenfeld agreed. Shenfeld is expected to provide a forecast, along with other top economists, with Finance Minister Bill Morneau in Toronto on October 13.
An interest rate cut generally means that the economy has fallen into recession. In response to recession, the Bank of Canada targets lower interest rates that encourage people to take out loans and invest money.
Interest rate cuts amid recession provide opportunities for you to build your investment portfolio. During these times, you can leverage low mortgage rates to buy real estate. Additionally, you may also take advantage of interest rate cuts to refinance existing debt. Refinance by either negotiating lower rates with existing lenders or taking out new loans to pay off current liabilities.
Are you looking to buy a property? If you like, I can tell you exactly how much you can afford to borrow, which is the best mortgage for you or how much I could save you right now if you have an existing mortgage.
Until next time,
Your mortgage expert Evgeny Kamenskiy