What will the Bank of Canada do with the trend setting bank rate on January 20? Well, in a survey of 11 of the top securities economists in Canada 6 have predicted a .50% drop and 5 predict a .25%.
I think it will be .50%, or gasp….75%. Why? First of all The Bank of Canada knows that the banks are still not matching their rates in lock step so if they go .25% then their will be ZERO effect on the economy as the banks are less likely to drop. If they go .50% then that allows the banks to drop .25% which may be all they Bank of Canada wants?
If the jobless numbers for December are worse then the Bank is expecting then they will want a .50% drop by the banks so they may go .75%.
We shall see…
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