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Email this11:27 am
October 21, 2013
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https://www.bankofcanada.ca/2021/10/fad-press-release-2021-10-27/
Rate remains at .25; QE ending.
They don't anticipate raising the rate until mid-2022.
12:36 pm
October 27, 2013
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About what was expected I think.
The surprise to me was the ~1 cent strengthening of the loonie immediately thereafter (for what I thought was a no-news event). The 12 hour chart here is telling https://www.xe.com/currencycharts/?from=CAD&to=USD&view=12H
I've been waiting for an 80 cent loonie (or lower) to complete a USD-->CAD Norbert's Gambit. The last time I converted in Mar 2020, it was at about 70 cents.
1:07 pm
October 29, 2017
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Maintained at 0.25% for the overnight rate.
1:49 pm
December 15, 2016
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Vatox said
Maintained at 0.25% for the overnight rate.
BOC will probably do the same thing that Greenspan did in 2007, fall asleep at the switch until it's too late.
1:58 pm
September 7, 2018
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Righand said
BOC will probably do the same thing that Greenspan did in 2007, fall asleep at the switch until it's too late.
Yes - the rate should have been increased - but it is not in the government's interest to do so - they want to contain the cost of servicing cost of govt debt (which is high). The day of reckoning will come if the economy does not "roar back".
2:23 pm
October 27, 2013
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The short term rate just depresses the short end of the yield curve. It could, in fact, result in a steepening of longer durations, and will probably do so now that the BoC has closed the valve on QE. The bond market will now find its own trajectory.
2:23 pm
October 29, 2017
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I see higher inflation coming!
4:39 pm
January 9, 2011
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Loonie said
https://www.bankofcanada.ca/2021/10/fad-press-release-2021-10-27/Rate remains at .25; QE ending.
They don't anticipate raising the rate until mid-2022.
B of C has always been obsessed with the subtle shift in thinking, the telegraphing well in advance, and repeatedly so. Therefore I expect another change in thinking next time followed by an increase late winter/early spring 2022. IMO the big driver in not acting is the government and the massive debt its created, not the real world.
"Keep your stick on the ice. Remember, I'm pulling for you. We're all in this together." - Red Green
10:45 am
October 29, 2017
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dougjp said
B of C has always been obsessed with the subtle shift in thinking, the telegraphing well in advance, and repeatedly so. Therefore I expect another change in thinking next time followed by an increase late winter/early spring 2022. IMO the big driver in not acting is the government and the massive debt its created, not the real world.
Perhaps so, but the destructive force of inflation is a bigger problem. I’m thinking they are just closing their eyes and hoping it goes away by itself.
11:15 am
September 11, 2013
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Kind of a funny world, where a pandemic that shuts stuff down ends up with people having lots more money to spend thus causing inflation. Too bad they were so dumb back in the Dirty 30's, could have avoided a lot of misery just by QE, gov't debt financing, etc.
1:17 am
January 10, 2021
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i believe they will walk back. there is no reason canada shouldn't be like eu or japan with negative or 0% rate for decades to come.
4:38 am
April 27, 2017
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mikehampel said
i believe they will walk back. there is no reason canada shouldn't be like eu or japan with negative or 0% rate for decades to come.
There is a reason. Japan had a massive asset bubble burst which screwed up banks and made them unhealthy and risk averse for a very long time. None of that happened here. And demographic deterioration in Japan does not begin to compare to Canada’s.
8:22 am
April 6, 2013
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Also, North America doesn't have some of the business cultural issues that Japan had. "Loss of face" is not as big of an issue here.
For example, if a store or business stops paying its rent, the mall owner or landlord will, within months, tape a notice to the door, change the locks, and evict. The facilities can then be rented out to a more productive business.
No letting the walking dead "zombie" business stay for years rent-free to keep up pretenses and avoid "loss of face".
Similar with loans which are the renting of money.
11:07 am
April 14, 2021
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mikehampel said
i believe they will walk back. there is no reason canada shouldn't be like eu or japan with negative or 0% rate for decades to come.
Can someone explain the 'negative' rate from Japan and the supposed 'asset bubble'?
11:09 am
April 14, 2021
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Norman1 said
Also, North America doesn't have some of the business cultural issues that Japan had. "Loss of face" is not as big of an issue here.For example, if a store or business stops paying its rent, the mall owner or landlord will, within months, tape a notice to the door, change the locks, and evict. The facilities can then be rented out to a more productive business.
No letting the walking dead "zombie" business stay for years rent-free to keep up pretenses and avoid "loss of face".
Similar with loans which are the renting of money.
If 'loss of face' is a concern, then the landlords would still be looking for a new tenant. Once secured, the deadbeat would be removed. Of course, if no replacement can be found, then the deadbeat might be allowed to stay.
11:50 am
April 6, 2013
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The tenant was the one who failed. So, it wouldn't be the landlord who was going to lose face. It was going to be the tenant!
12:04 pm
October 21, 2013
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I am certainly no expert in Japanese culture, but it is my understanding that causing someone to lose face is perhaps just as serious a faux pas as losing it. Thus the landlord would be involved in the face-saving exercise as well.
It's an intricate social balance, one that we don't have.
2:02 pm
December 15, 2016
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ISTM that we're getting off track of the real cause. How about..
"At their peak, prices in central Tokyo were such that the Tokyo Imperial Palace grounds were estimated to be worth more than all the land in the entire state of California."
https://en.wikipedia.org/wiki/Japanese_asset_price_bubble#Asset_prices
IIRC, just before the collapse all of the real estate in Tokyo was equal to all of the real estate in the U.S. or something along those lines.
10:27 am
April 6, 2013
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Those prices were after converting to US$. The Japanese Yen had appreciated substantially against the US$ up to that time on top of the increased local price in Yen.
At the start of 1980, US$1 = JP¥238.45 according to Dollar Yen Exchange Rate (USD JPY) - Historical Chart. By start of 1990, only JP¥146.25 was required to buy US$1.
I remember chatting with some Japanese tourists back then. To them, prices in the rest of world were around 40% off!
The low interest rates and increased money supply were attempts by Japan's central bank to re-inflate their economy. They obviously didn't work and disproved economic theories that increasing money supply causes inflation. In Japan's case, they actually wanted higher inflation.
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