This statement is from 2009 when low interest rates started. Can we stay at this level forever? No.
Mark Carney’s comments on economic stimulation done : Bank of Canada Governor Mark Carney said on Wednesday:
In total, since December 2007, we have cut interest rates by 425 basis points to their historic lows and lowest possible levels. It is the Bank’s judgment that this cumulative easing, together with the conditional commitment to keep rates low for a considerable period, is the appropriate policy stance to move the economy back to full production capacity and to achieve the 2 per cent inflation target.
Given I suspect there wasn’t much else that could be done in terms of interest rates and such, this really is the default statement Mr. Carney can make. So no more stimulation or interest cuts are likely from the Bank of Canada, not a big surprise, but nice to see they are going to try to keep these rates low for a while too.
What about our recovery from the Great Financial Apocalypse?
As a result of the current global economic and financial situation, the Bank now projects that the Canadian recession will be deeper than we projected in the January MPR Update. Our return to growth will be delayed by one quarter, to the end of 2009, and our recovery will be somewhat more gradual.
Whoops, so that recovery that was due mid-year is now kind of end of year-ish with a chance that it may only happen a little later than that. Again, not a real big surprise, given the entire Automobile industry has to get it’s “poop” together first and the associated economic upheaval caused by this (which we are in the middle of currently).
Wow Mr. Carney, do you have anything positive for us?
- While there remains a high degree of uncertainty – particularly with the Canadian economy dependent on forces beyond our borders – we remain confident in the prospects of eventual economic recovery in Canada.
- This recovery should be supported by the following factors:
– the gradual rebound in external demand;
– the end of the stock adjustments in Canadian and U.S. residential housing;
– the strength of Canadian household, business, and bank balance sheets;
– our relatively well-functioning financial system and the gradual improvement in financial conditions in Canada;
– the past depreciation of the Canadian dollar;
– stimulative fiscal policy measures;
– the timeliness and scale of the Bank’s monetary policy response.
OK! Well don’t give yourself whiplash patting yourself on the back just yet either. We need a weaker dollar, households to start spending, a stock market rally and an increase in demand? I am seeing signs of some of these things, but certainly not all of it yet!
Still useful to hear an expert’s point of view on our economic world, I guess.
