Bank of Canada Cut Rates 0.25% to Save the Economy! Not Home Buyers or Owners

Welcome back to the episode of Finance Fridays. This week we hear from the Bank of Canada, where they've cut their overnight lending rate/benchmark rate from 5% down to 4.75% - a whole whopping 0.25 basis points. Although this change is not large and does not have a significant impact on many Canadians, it is a sign of relief and the possibility of more rate cuts to come. But the real question is, why did the Bank of Canada cut in June? The reality is not good! With the possibility of a recession on the brink in Canada as a result of what is happening with GDP and unemployment, as well as higher immigration levels and job vacancies, there is a whole slew of problems brewing underneath the scenes here in Canada, and that is causing a lot of potential problems for the Bank of Canada.
Not only is Canada lacking in business and investment money, it is also decoupling from the US as a result of two different economies - one performing very well (aka the USA) and one not so good (Canada). With all this conversation around exchange rates and the US to the Canadian dollar, the Bank of Canada had to act and cut at least 0.25% to relieve some of the pressures in the market right now. So, what does it mean for Canadians with a variable-rate mortgage? What does it mean for the future of the housing market here in Canada? What are our thoughts and opinions on where Canadians are going to go next when it comes to housing? Are they going to buy? Are they going to wait? Let's find out as we explore this episode together. Once again, don't forget to like, share, and subscribe to the channel. Thanks again for watching."
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[@Alex_Plante]

I lived through the 80s and 90s and the terrible recessions caused by central bank tight monetary policies. The Bank of Canada knows that what brings down inflation, is high unemployment. The unemployment rate is a lagging indicator of the business cycle. I think the BoC knows that Canada is entering into a recession.

[@intouchmortgages]

can't disagree with you on this. I think they see the writing on the wall and are learning to act now rather than wait and see. If Canadians can't pay their mortgages, then we are in a whole lot of trouble! Thanks for your support!

[@houmanraf2887]

Thank you very much for the great information. How much do you think fixed rates could come down at the end and when do you think it may happen.

[@intouchmortgages]

As of today, fixed rates are unlikely to come down immediately. I firmly believe we are stuck in this zone for a while. I hope I'm wrong for the sake of Canadians, but the markets must digest the data from the Bank and see what the US Fed does this week on the 11th and 12th. If we hear talk about a cut in the US, markets will likely react positively, leading to a drop in US Treasuries and, consequently, CAD bonds.

[@groovyengineer]

Inflation will return and we lose both the economy and the northern peso.

[@intouchmortgages]

Wow! it's all doom and gloom! I really hope your prognosis is wrong or we are all headed for bad times!

[@renatovenuto296]

👌

[@zomgoose]

Stagflation

[@intouchmortgages]

It is very possible at this point.