Friday, February 13, 2009

RBC speculating Bank of Canada will drop rate to .5% - unprecedented!

RBC made some interesting comments regarding the Bank of Canada a few days back. They expect the Bank of Canada to drop their prime rate to .5% in March, wow, that would be unprecedented!

See the article below.

I hope this finds you happy and healthy,

Bank of Canada —Now what?

The bleak near-term outlook supported the Bank’s decision to cut the overnight rate by 50 basis points to 1.00% in mid-January and early 2009 data confirmed that the recession is building momentum.

With the surprising large drop in employment and corresponding jump in the unemployment rate, we now look for the Bank to ease the policy rate to just 0.5% in March.

With so much bad news already embedded in the Bank’s forecast, it would take signs of a more severe global contraction, another financial market hiccup or a failure of the government’s fiscal stimulus package to produce results before we would look for the Bank to lower the policy rate to zero or resort to more unconventional policy measures.

Unfortunately, none of these factors can be ruled out!

No comments:

Post a Comment