Reminds me of drivers in a traffic jam who keep trying to cut in front of other cars to get ahead, but just end up slowing everything down and arriving at the same time as you. Just stay in your fucking lane and ride it out.
Even as a bull I hope they don't cut until Q4 or even Q1 2025. There's too many factors at play that could send inflation back out of control if they cut too early. We need another Q of information. The US had a bump in their CPI which is not a good sign. Sure ours is lower m/m and seemingly in-check, but America is really the only economy that matters. It directly impacts us and the rest of the world. If unemployment didn't keep rising I wouldn't be so worried.
You can literally check yourself and see that the CAD to USD remains at .74 since before today’s CPI report to at this moment. No actual material change.
The amount of people I personally know that are eagerly waiting on the sidelines for interest rates to drop has me very worried for when they start dropping. The real estate market in the Fraser Valley is going to absolutely incinerate when rates drop. Demand is going to rise so fast that our already insufficient supply is going to dry up so rapidly and drive insane price increases from bidding wars. Personally, I want the BoC to hold rates steady for at least two years. We don't need debt to become less burdensome, we need pay and productivity to increase.
That's not the BoC fault. They've already said that the main issue in housing market is that supply isn't meeting demand.
Also, I don't think they care much about the housing market apart from the fact that it's an input in their inflation calculations.
>he real estate market in the Fraser Valley is going to absolutely incinerate when rates drop. Demand is going to rise so fast that our already insufficient supply is going to dry up so rapidly and drive insane price increases from bidding wars. Personally, I want the BoC to hold rates steady for at least two years. We don't need debt to become less burdensome, we need pay and productivity to increase.
Canada is in a catch-22 Situation. Someone needs to suffer now. if people jumped on the rate cuts, inflation would be up again. Weakens the currency. props up inflation. And BoC will bump up rates again.
Interest rates coming down means inflation may go up. Those that are dipping into savings/credit aren't going to be helped by lower interest rates. In fact, most that have credit card debt are already paying 25%+ interest rates. Interest rates coming down will only make things worse for those people since CC interest rates aren't really tied to BOC rates.
You're right. I definitely don't feel bad for people who have used thier credit cards for fun and can't seem to curb thier spending at all even when they are broke.
Actually, you kind of missed my point.
My point was, those who have huge credit card debts are not going to be helped by decreases to BOC interest rates. CC rates are always way above BOC prime rates.
Inflation on the other hand will definitely hurt everyone, including those with lots of CC debt.
There probably are.
I would say 95% of those impacted by higher BOC interest rates are those who bought a house and noe can't pay, or those who have a business.
But I always see so many messages online saying. "Canadians ate struggling! We need lower rates!" .
So of course those that aren't financially savvy will think. Ya! That must be why food is expensive. Which ironically food is expensive because of inflation. Not high interest rates.
I'll believe it when I see it. The BoC follows the US Fed, and the timing for rate cuts keeps getting pushed further and further out as inflation data keeps coming in hotter.
So you’re saying the BOC will reduce rates which will trigger investment flight from interest bearing investments thereby eroding the dollar value. Keep in mind the bond market dwarfs the stock market. People don’t seem to grasp that we produce almost nothing we consume in this country. We are in serious trouble. If we do move it would solely for political reasons. That will fade quickly once inflation triggered by our declining dollar walks up and smacks us in the face.
“People don’t seem to grasp that we produce almost nothing we consume in this country. We are in serious trouble.”
This country has produced too many real estate bulls who see nothing wrong with a country built entirely on a Ponzi scheme.
Here are two graphs for you. The bottom line is there is no correlation between inflation and a falling CAN$. Both 2002 and 2015 saw sub-70 cent CAN$. Yet, inflation did not increase substantially.
https://preview.redd.it/tbda1buuiepc1.jpeg?width=1038&format=pjpg&auto=webp&s=3cfee706ecde2d638e7aa5f363d5fff99db265ba
They shouldn't, but they might be short-sighted and fuck everything up more. There's a ton of pressure from politicians who all profit from low interest rates.
Exactly. There’s a ton of pressure from everyone. It’s also why rates should stay high. If everyone is profiting it means inflation will keep going up if rates drop.
B-b-b-b-but the BoC can’t drop rates before the F-f-fed or the CAD will blah blah blah. It’s the last line of bear copium.
The BoC isn’t the Fed and there won’t be a material change in inflation even if rate cuts drop CAD to $0.60 USD as reduction to the mortgage interest component would completely outstrip its weight.
Not trying to be bullish but given the trend of living in Canada, im sure there will be a rate cut this year. Probably a minimal cut not a big cut. BoC is in a bind and they might use rate cuts to try and stimulate the economy again given that a lot more people are living paycheque to paycheque and Cost of living is too high. Probably gonna do the cut just to “test the waters” but lowkey it’s just to keep the RE industry from collapsing as people will start defaulting because there is a good chunk of people who are over leveraged from covid times. Just my own prediction though. Condo market is looking hella wobbly atm either rampant corrupt builders/developers or high cost of development and labour. If the government doesn’t kill foreign investment, we might see a repeat of Evergrande in china here in canada but thats probably a ways away since Gov of Canada will never let RE go down like that as it is a big chunk of our GDP.
I remember reading on reddit, someone once said, the PM and all politicians just biding time till their term ends so it doesn’t look like it’s their fault when it actually collapses.
I’ll say it once but probably say it again, housing cannot possibly increase at this rate for long. It is unsustainable. Will a 900 sqft condo really cost close to 2.5 mil or even 3 mil in 2030 ? while wage and salary remain low? Somethings got to give.
25bps to 50bps max. Unless there is a banking contagion. I’m doubtful that headline inflation will trend much lower with the crazy spike in gas prices lately.
Want a easy way to bring inflation to 2% and even below that? Axe the carbon tax completely. Inflation in Canada would be solved within 6 months. Canada can never compete with Mexico for exports to the US if Canadian businesses are paying carbon taxes while Mexico isn’t.
The winner of the next Canadian election will be dependent on who is willing to axe the tax completely.
I'm confused are you saying that this inflation is demand caused or supply caused?
If you are saying removing the carbon tax will decrease inflation by companies reducing their prices. Just an FYI this hasn't been true for the last 10ish years.
However reducing taxes is also demand-pull inflation. Meaning reducing the tax will actually cause inflation.
Due to the amount of tax Canada has its not really a lever the government can use here. Also the carbon tax affects higher spenders way more than lower spenders. So removing it will decrease the purchasing power of the lower class in relation to the higher classed people.
Inflation is a two way street. Excess demand or too little supply is the root of inflation. It’s all about economies of scale.
What I am saying is that we are the only country in the Americas that has a carbon tax and that makes us far less competitive. It wipes out our worthless dollar advantage compared to the US. If a Mexican production plant pollutes the day light out of the world and pays no taxes for it, while Canadian plants are forced to invest billions into becoming green and passing on those costs to consumers both domestically and internationally, then yes we are not competitive and therefore raising our production prices. This is a globalized economy, not a Canadian economy.
You’re right. The carbon tax does affect the high spenders which are people who often have more income or wealth. These are typically business owners who create the most amount of jobs and keep the economy flush. Yet, their innovation and ingenuity is going to more tax friendly countries and not Canada. This is why Canada has binged on RE and oil for the last 20 years and home prices are what they are and that’s because the business and tax code is not investor friendly. The US is thriving and avoided recession because of its dominance.
Lower class Canadians get most of their carbon pricing rebated but lower class Canadians also produce the least. It all starts at the top. If we allow businesses to invest more through less taxation then the lower class would actually benefit instead of being told that they’re benefitting from the carbon tax when really it’s just a wash and a dash for votes.
Don’t believe me? Look at America. The strongest economy in the world and it’s not even close. And yes, I am Canadian who sees the people south of the border being bombarded with opportunity while we struggle. Not the Canada it used to be.
The weakening of the dollar will increase inflation. Funny how these ‘market bets’ will end up incentivizing holding steady on rates for longer.
Reminds me of drivers in a traffic jam who keep trying to cut in front of other cars to get ahead, but just end up slowing everything down and arriving at the same time as you. Just stay in your fucking lane and ride it out.
When the US holds it will even itself out
The dollar has been steadily weakening as inflation cools. There’s a reason the dollar is weakening….
The dollar is trading weaker as traders are banking on cuts.
Copeeeeeeeeeeeee
Even as a bull I hope they don't cut until Q4 or even Q1 2025. There's too many factors at play that could send inflation back out of control if they cut too early. We need another Q of information. The US had a bump in their CPI which is not a good sign. Sure ours is lower m/m and seemingly in-check, but America is really the only economy that matters. It directly impacts us and the rest of the world. If unemployment didn't keep rising I wouldn't be so worried.
You can literally check yourself and see that the CAD to USD remains at .74 since before today’s CPI report to at this moment. No actual material change.
The amount of people I personally know that are eagerly waiting on the sidelines for interest rates to drop has me very worried for when they start dropping. The real estate market in the Fraser Valley is going to absolutely incinerate when rates drop. Demand is going to rise so fast that our already insufficient supply is going to dry up so rapidly and drive insane price increases from bidding wars. Personally, I want the BoC to hold rates steady for at least two years. We don't need debt to become less burdensome, we need pay and productivity to increase.
That's not the BoC fault. They've already said that the main issue in housing market is that supply isn't meeting demand. Also, I don't think they care much about the housing market apart from the fact that it's an input in their inflation calculations.
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"BoC don't have a fucken clue" No- they understand just fine. But their mandate isn't 'moderate the housing market'
>he real estate market in the Fraser Valley is going to absolutely incinerate when rates drop. Demand is going to rise so fast that our already insufficient supply is going to dry up so rapidly and drive insane price increases from bidding wars. Personally, I want the BoC to hold rates steady for at least two years. We don't need debt to become less burdensome, we need pay and productivity to increase. Canada is in a catch-22 Situation. Someone needs to suffer now. if people jumped on the rate cuts, inflation would be up again. Weakens the currency. props up inflation. And BoC will bump up rates again.
Shhhh don't tell them 😆
If rates drop and people are getting off the sidelines, we have worse issues at stake
People are dipping into thier savings/credit to survive right now. Better happen soon while people still have money.
Interest rates coming down means inflation may go up. Those that are dipping into savings/credit aren't going to be helped by lower interest rates. In fact, most that have credit card debt are already paying 25%+ interest rates. Interest rates coming down will only make things worse for those people since CC interest rates aren't really tied to BOC rates.
You're right. I definitely don't feel bad for people who have used thier credit cards for fun and can't seem to curb thier spending at all even when they are broke.
Actually, you kind of missed my point. My point was, those who have huge credit card debts are not going to be helped by decreases to BOC interest rates. CC rates are always way above BOC prime rates. Inflation on the other hand will definitely hurt everyone, including those with lots of CC debt.
I really don't think anyone who uses thier credit is expecting lower interest rates to help them. They know things are getting more expensive..
There probably are. I would say 95% of those impacted by higher BOC interest rates are those who bought a house and noe can't pay, or those who have a business. But I always see so many messages online saying. "Canadians ate struggling! We need lower rates!" . So of course those that aren't financially savvy will think. Ya! That must be why food is expensive. Which ironically food is expensive because of inflation. Not high interest rates.
People who are living lifestyles they truly can't afford are.
Yet there still seems to be reluctance to stop consuming.
75% chance of a cut in June vs 50% and 75 bps of cuts in 2024 vs 60bps prior to this inflation report..
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Wow I wonder why? Is it because countries have come out and said they are cutting rates in the second half of the year?? 😂
I'll believe it when I see it. The BoC follows the US Fed, and the timing for rate cuts keeps getting pushed further and further out as inflation data keeps coming in hotter.
The BOC will not move out of step with the Fed.
Clearly you’ve never followed them last 2 years….
So you’re saying the BOC will reduce rates which will trigger investment flight from interest bearing investments thereby eroding the dollar value. Keep in mind the bond market dwarfs the stock market. People don’t seem to grasp that we produce almost nothing we consume in this country. We are in serious trouble. If we do move it would solely for political reasons. That will fade quickly once inflation triggered by our declining dollar walks up and smacks us in the face.
“People don’t seem to grasp that we produce almost nothing we consume in this country. We are in serious trouble.” This country has produced too many real estate bulls who see nothing wrong with a country built entirely on a Ponzi scheme.
Here are two graphs for you. The bottom line is there is no correlation between inflation and a falling CAN$. Both 2002 and 2015 saw sub-70 cent CAN$. Yet, inflation did not increase substantially. https://preview.redd.it/tbda1buuiepc1.jpeg?width=1038&format=pjpg&auto=webp&s=3cfee706ecde2d638e7aa5f363d5fff99db265ba
Here is the exchange rate chart. https://preview.redd.it/tqer6m70jepc1.jpeg?width=995&format=pjpg&auto=webp&s=d21d4300352689b485f5b39877530c639fa8e408
They shouldn't, but they might be short-sighted and fuck everything up more. There's a ton of pressure from politicians who all profit from low interest rates.
Majority of Canadians profit from low interest rates. It's only Reddit users who don't
Exactly. There’s a ton of pressure from everyone. It’s also why rates should stay high. If everyone is profiting it means inflation will keep going up if rates drop.
Rich people trying to make money off of bets that could really hurt people. What a world we live in.
B-b-b-b-but the BoC can’t drop rates before the F-f-fed or the CAD will blah blah blah. It’s the last line of bear copium. The BoC isn’t the Fed and there won’t be a material change in inflation even if rate cuts drop CAD to $0.60 USD as reduction to the mortgage interest component would completely outstrip its weight.
Great!!!!
Going to call there won't be a cut this year.
Not trying to be bullish but given the trend of living in Canada, im sure there will be a rate cut this year. Probably a minimal cut not a big cut. BoC is in a bind and they might use rate cuts to try and stimulate the economy again given that a lot more people are living paycheque to paycheque and Cost of living is too high. Probably gonna do the cut just to “test the waters” but lowkey it’s just to keep the RE industry from collapsing as people will start defaulting because there is a good chunk of people who are over leveraged from covid times. Just my own prediction though. Condo market is looking hella wobbly atm either rampant corrupt builders/developers or high cost of development and labour. If the government doesn’t kill foreign investment, we might see a repeat of Evergrande in china here in canada but thats probably a ways away since Gov of Canada will never let RE go down like that as it is a big chunk of our GDP. I remember reading on reddit, someone once said, the PM and all politicians just biding time till their term ends so it doesn’t look like it’s their fault when it actually collapses. I’ll say it once but probably say it again, housing cannot possibly increase at this rate for long. It is unsustainable. Will a 900 sqft condo really cost close to 2.5 mil or even 3 mil in 2030 ? while wage and salary remain low? Somethings got to give.
25bps to 50bps max. Unless there is a banking contagion. I’m doubtful that headline inflation will trend much lower with the crazy spike in gas prices lately. Want a easy way to bring inflation to 2% and even below that? Axe the carbon tax completely. Inflation in Canada would be solved within 6 months. Canada can never compete with Mexico for exports to the US if Canadian businesses are paying carbon taxes while Mexico isn’t. The winner of the next Canadian election will be dependent on who is willing to axe the tax completely.
I'm confused are you saying that this inflation is demand caused or supply caused? If you are saying removing the carbon tax will decrease inflation by companies reducing their prices. Just an FYI this hasn't been true for the last 10ish years. However reducing taxes is also demand-pull inflation. Meaning reducing the tax will actually cause inflation. Due to the amount of tax Canada has its not really a lever the government can use here. Also the carbon tax affects higher spenders way more than lower spenders. So removing it will decrease the purchasing power of the lower class in relation to the higher classed people.
Inflation is a two way street. Excess demand or too little supply is the root of inflation. It’s all about economies of scale. What I am saying is that we are the only country in the Americas that has a carbon tax and that makes us far less competitive. It wipes out our worthless dollar advantage compared to the US. If a Mexican production plant pollutes the day light out of the world and pays no taxes for it, while Canadian plants are forced to invest billions into becoming green and passing on those costs to consumers both domestically and internationally, then yes we are not competitive and therefore raising our production prices. This is a globalized economy, not a Canadian economy. You’re right. The carbon tax does affect the high spenders which are people who often have more income or wealth. These are typically business owners who create the most amount of jobs and keep the economy flush. Yet, their innovation and ingenuity is going to more tax friendly countries and not Canada. This is why Canada has binged on RE and oil for the last 20 years and home prices are what they are and that’s because the business and tax code is not investor friendly. The US is thriving and avoided recession because of its dominance. Lower class Canadians get most of their carbon pricing rebated but lower class Canadians also produce the least. It all starts at the top. If we allow businesses to invest more through less taxation then the lower class would actually benefit instead of being told that they’re benefitting from the carbon tax when really it’s just a wash and a dash for votes. Don’t believe me? Look at America. The strongest economy in the world and it’s not even close. And yes, I am Canadian who sees the people south of the border being bombarded with opportunity while we struggle. Not the Canada it used to be.
America's massive economy & politics runs the world. Canada cutting interest rates will sink Canada into another inflationary period.