BCREA ECONOMICS NOW - Bank of Canada Interest Rate Announcement - December 6, 2011
As anticipated, the Bank of Canada maintained
its target rate at 1 per cent this morning. On inflation, the Bank noted
that it " expects the inflation rate to decline as a result of reduced
pressures from food and energy prices and ongoing excess supply in the
economy." The Bank expects a weaker external outlook and the ongoing
sovereign debt crisis in Europe to dampen Canadian economic growth in the near
future.
Although markets have been pricing in a rate cut of late, our baseline view is
that the Bank of Canada is unlikely to move on interest rates absent a serious
escalation of the Euro-zone crisis.
Even without an escalation of the Euro-crisis, 2012 will be a challenging year
in the global economy. The uncertainty and austerity imposed in Europe
will almost certainly cause much of the EU to fall into a recession. Moreover
the fiscal drag from fading stimulus and further cuts to government spending
will subtract from growth in the United States. Given these challenges, our
current forecast is for the Bank of Canada to stay on the sidelines for much of
2012 with the possibility of a 25 basis point rate increase coming toward the
end of next year.
For more information, please contact:
Cameron Muir |
Brendon Ogmundson |
Chief Economist |
Economist |
Direct: 604.742.2780 |
Direct: 604.742.2796 |
Mobile: 778.229.1884 |
Mobile: 604.505.6793 |
Email: cmuir@bcrea.bc.ca |
Email: bogmundson@bcrea.bc.ca |
BCREA represents 11 member real estate boards and their approximately 18,000 REALTORS® on all provincial issues, providing an extensive communications network, standard forms, economic research and analysis, government relations, applied practice courses and continuing professional education (cpe).