The central bank left its key policy rate unchanged at one per cent, but assumed a more hawkish tone in its accompanying statement, increasing the likelihood of rate hikes sometime this fall.
While the subsequent rise in the loonie is not unexpected, some analysts worry that further appreciation against the U.S. dollar could trip up Canada’s still-fragile economy and perversely, dampen the central bank’s more aggressive plan to tighten monetary conditions.
“By sending a clear warning shot of interest rate hikes to come, the Bank of Canada is willing to live with a somewhat stronger Canadian dollar,” said Avery Shenfeld, chief economist at CIBC World Markets. “Nonetheless, the stronger the currency, the fewer rate hikes we may end up talking about.”
The Bank of Canada’s latest rate announcement was highlighted by a slight but clear change in the wording of its policy statement. The central bank is now saying “some of the considerable monetary policy stimulus currently in place will be withdrawn” compared with “eventually withdrawn” in the May statement.
By dropping the word “eventually,” Shenfeld said the bank gave a “nottoo-subtle hint” that it expects to begin the process of interest rate hikes sooner than business analysts had expected. While most analysts headed into Tuesday’s announcement predicting a first rate hike in December or even later, it now appears the next quarter-point hike could come in October, if not September.
(credits for portion of this article given to VancouverSun.com)
SO WHAT TO DO?
1. Buying ? You can still wait, if you are not in hurry?!!!
2. Prices to go down? ( Wait and You will see …)
3. Selling ? Home will be SOLD if it is priced right.
any comments or questions, please post below…