Bank of Canada to Raise Rate?

[TimLacroix]

Bank of Canada meets next week and I am curious as to what Beyonders think of when Bank of Canada will finally raise rates?

2014
2015
Or later...

The Bank of Canada has kept its benchmark lending level at 1% since September 2010, and most forecasters have ruled out any increase in that rate until around mid-2015. Any change will depend on inflation remaining near the midday point of the bank’s 1%-to-3% comfort range.

[leftwing]

At this point, wouldn't a rise in interest rates make it virtually impossible to enter the market in already expensive areas such as Calgary, Van, Toronto etc? Or would that just be a short term consequence in order to cool down these hot markets?

Edit: Im gonna vote 2016

[suntan]

Inflation is up, dollar is down.

They have options now.

Any raises in the prime rate will lower housing prices.

[BigMass]

never. Central banks coordinate low rates and QE so dollar devaluation plays out on equal footing and doesn't affect trade as much as it would with wider discrepancies. Canada will never raise rates until after the US does. The US will never raise rates because it is the biggest debtor on earth and would go into a budget crisis and the banks that were bailed out in 09 would go back into failure. The stock market right now is dependent on free money from the Fed with zero interest rates. The banks would fail and the market would collapse. The government would implode and housing would crash. It's a Ponzi scheme that needs to keep going in perpetuity or the global economy will suffer a huge long scale depression. If anything they will bring back QE and implement negative interest rates like in Europe. Remember, they've been talking about raising rates since 2011 now. It won't happen because it can't happen on a mathematical level.

[suntan]

QE is dead.

No need for "negative interest rates" in NA. Europe doesn't have an autonomous central bank, which is why they're flailing around over there.

[BigMass]

Originally posted by suntan
QE is dead.

No need for "negative interest rates" in NA. Europe doesn't have an autonomous central bank, which is why they're flailing around over there.

QE is dead until you realize there are many other ways to skin a cat. Such as Fed backdoor buying through Belgium and other financial institutions. Same with futures manipulation and backstopping stock market downturns at every corner. Past few days have been absolutely comical in terms of fed intervention in the market at every sign of a roll over.

[suntan]

Pfft. Those things are small peanuts. Tell me when they decide to buy back another $2 trillion worth.

[BigMass]

Originally posted by suntan
Pfft. Those things are small peanuts. Tell me when they decide to buy back another $2 trillion worth.

well lets get back on topic. Fed is not raising rates. not now, not in 2015, not in 2016, not in 2017. I need a "never" option. Remember, last year everyone was, "for sure 2014 rates are going up" LOL ok. In 2012 everyone was saying "2013 for sure rates are going up". Don't forget, "there won't be a QE2"... "there won't be a QE3"... now everyone is saying "there won't be a QE4". "There is no stock market bubble, there is no housing bubble". The propagandists are full for these days. The had to trot out Bullard yesterday in a total propaganda move to help the markets not tank. Bullard is not even a voting member so total strategic because he has no accountability lol. What a complete joke the entire system is.

[suntan]

Just forget about the US for a second, you don't think our central bank wouldn't raise rates, by, say, 1/4%? A raise is a raise.

[kenny]

They won't raise rates. If there is a rate hike coming, they'll signal that first and it'll be a few meetings before they actually start going up.

[Feruk]

Originally posted by leftwing
At this point, wouldn't a rise in interest rates make it virtually impossible to enter the market in already expensive areas such as Calgary, Van, Toronto etc?
Housing prices would drop with a raise in rates. Unless you could pay with a substantial down payment in cash, affordability wouldn't change. The only people who lose in an interest rate increase are those who currently hold property. Or even worse, those who pay mortgages on property as the house value would drop but the mortgage size would not.


Originally posted by BigMass
now everyone is saying "there won't be a QE4". "There is no stock market bubble, there is no housing bubble". The propagandists are full for these days. The had to trot out Bullard yesterday in a total propaganda move to help the markets not tank.
Agreed. It goes two ways from here. Either Fed does nothing, and today was a dead cat bounce, or Fed announces QE4 and the bubble continues. My guess (and hope) is option 1.

[sabad66]

I hope they raise them next year (looking to buy a place so would love a value drop or even just keep them steady), but I definitely don't see it happening Til at least 2016.

[broken_legs]

Originally posted by BigMass
never.

[max_boost]

Freedom 35. Please don't raise rates yet. I'm so close.

[ExtraSlow]

I'm torn. if they raise rates and it truly does see a drop in house values, then I would obviously lose some money on the place I'm in now, but it would make it a littel easier for me to upgrage into a bigger place.

I did my last upgrade, from starter to "step-up" house in the bottom of the 2009 housing market trough. it was awesome. Saved me at least a hundred grand on the place I'm in now.

[Sugarphreak]

...

[Xtrema]

Originally posted by Sugarphreak
I wished they raised rates over a year ago... it would have stabilized this run away housing market and probably the TSX as well. Instead now we face a correction which is going to hurt everyone, and to boot my RSP's have earned fuck all thanks to stupid low interest rates.

But TSX and Dow both hand a good 2-3 year run tho. I already retreated to bonds and cash in the summer. I now welcome higher interest rate and a correction.

[Sugarphreak]

...

[Feruk]

Originally posted by Sugarphreak
It has created a market where a lot of people can make money (myself included), but my concerns are more what happens to all the people who are leveraged right out on variable interest loans when they lose their job and suddenly inflation spikes.

They all start crying "The rich get richer"
I think the actual saying is "the stupid get separated from their money." However, I doubt we'll see an increase, so the stupid over-leveraged will keep winning for now.

[BigMass]

Originally posted by Sugarphreak


It has created a market where a lot of people can make money (myself included), but my concerns are more what happens to all the people who are leveraged right out on variable interest loans when they lose their job and suddenly inflation spikes.

They all start crying "The rich get richer" because they saw this coming and retreated into things like bonds and cash; while they and are losing their shirts. Then you get the divide of people over it, it just isn't healthy for society in general compared to a more stable market.

Just my take on it... I normally benefit from these volatile market swings otherwise.

"punish savers and reward debtors" is the mandate of government. Why? Because the governments are the biggest debtors of them all. So those that squirrel away money and save are kicked in the nuts while those that manage money poorly, max out their credit cards, take out huge mortgages for houses they can't afford are rewarded through low rates and QE which inflates assets like houses and increases inflation, wiping out their debt levels. At the same time, wiping out the savings of those that chose to be conservative with their money and not take risk. It's really a no risk situation. Fed will backstop a rise in rates by buying bonds and will backstop the market by buying stocks and will backstop the housing market by buying mortgage backed securities. It's what it has been doing over the past 5 years racking up a 5 trillion dollar balance sheet. It's what every central bank has been doing around the world and will continue doing in perpetuity. The fed and other central banks can no longer ever, and by ever, I mean until the end of the universe, raise rates or unwind their balance sheet without a complete economic, financial and currency collapse.

[16hypen3sp]

I dunno. No one really knows anything. I definitely wouldn't count on the price of a home coming down if it is raised... you will more than likely just get squeezed out.

But hey, I'm no economist... but 9 times out of 10, they are the most wrong of anyone.

[liquid1010]

Originally posted by Xtrema


But TSX and Dow both hand a good 2-3 year run tho. I already retreated to bonds and cash in the summer. I now welcome higher interest rate and a correction.

Not sure I follow this logic.

You retreated to bonds with the thought that we will see an increase in interest rates? Cash I can see.... but bonds? Unless you plan to hold them the full duration (and even somewhat then), that seems counterintuitive.

The first portion of your idea seems fine (stepping out of equities), and was probably a decent idea.... so long as you jump back into the equity side during a correction (ie: now).

[Cos]

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