Call it a tale of two hemispheres. The Bank of Canada’s recent decision to leave it’s benchmark interest rate at 0.25% comes on the heels of a noticeable rate hike Australia. And that’s got some of our nation’s top analysts talking – especially in the wake of the strengthening loonie.
A recent article in The Globe and Mail, illustrates the general consensus amongst Canada’s top penny-pinching pundits and prognosticators is one of cautious optimism.
On the one hand, they suggest that the closer the Canadian dollar inches toward parity, with its U.S. counterpart, the tougher it will be on economic growth here. On the other, they surmise that rushing into any sort of hasty interest-rate hike, akin to the latest hike Down Under, would be premature at best.
So what does that mean for business and the consumer? I guess the biggest challenge is what is “normal” policy anymore? How can we plan and forecast when there is so much uncertainty coupled with the inability to forecast what the Bank of Canada will do.
Right now, the current state of our national housing market is certainly more balanced and stronger than it’s been since last winter. But both financial experts and critics point out that this recent real estate rebound is being increasingly overshadowed by a sluggish rebound in the economy.
Overall the BOC’s latest actions seem to reiterate it isn’t willing to play the role of ‘copycat’ just yet – even despite the constant concern that a rising loonie, especially above parity, will likely be bad for business.
What do you think? Drop me a line with your thoughts.
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