{"id":11973,"date":"2015-09-08T06:49:37","date_gmt":"2015-09-08T11:49:37","guid":{"rendered":"http:\/\/olduvai.ca\/?p=11973"},"modified":"2015-09-08T06:49:37","modified_gmt":"2015-09-08T11:49:37","slug":"interest-rate-cuts-a-two-edged-sword-for-bank-of-canada-don-pittis","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=11973","title":{"rendered":"Interest rate cuts a two-edged sword for Bank of Canada: Don Pittis"},"content":{"rendered":"<div class=\"story-headline\">\n<h3 class=\"story-title\"><a href=\"http:\/\/www.cbc.ca\/news\/business\/bank-of-canada-september-rate-announcment-1.3215658\" target=\"_blank\">Interest rate cuts a two-edged sword for Bank of Canada: Don Pittis<\/a><\/h3>\n<\/div>\n<p class=\"story-deck\"><strong>Another decrease could spur exports but would announce serious pessimism<\/strong><\/p>\n<p>Conjure up an image of Bank of Canada governor Stephen Poloz in Hamlet pantaloons, hand to brow, declaiming to the middle distance: &#8220;To cut or not to cut?&#8221;<\/p>\n<p>A confusion of contradictory economic data means it may\u00a0be a melancholy\u00a0choice. If the Bank of Canada were to lower interest rates for a third time this year at this Wednesday&#8217;s meeting, the\u00a0cut could spur exports and challenge other countries that have pushed their currencies lower.<\/p>\n<p>But there is a danger that it may instead be taken as a warning.<\/p>\n<ul>\n<li><strong><a href=\"http:\/\/www.cbc.ca\/news\/business\/canada-added-12-000-jobs-in-august-1.3215418\">Canada creates 12,000 jobs but jobless rate rises to 7%<\/a><\/strong><\/li>\n<li><strong><a href=\"http:\/\/www.cbc.ca\/news\/business\/buy-canada-the-bullish-case-for-the-canadian-economy-1.3214832\">Buy Canada. The bullish case for the Canadian economy<\/a><\/strong><\/li>\n<li><strong><a href=\"http:\/\/www.cbc.ca\/news\/business\/gdp-economy-recession-1.3210790\">Recession confirmed as Canadian economy shrinks again<\/a><\/strong><\/li>\n<\/ul>\n<p>A\u00a0<a href=\"http:\/\/ca.reuters.com\/article\/businessNews\/idCAKCN0R31MF20150903\">poll of 40 economists<\/a>\u00a0last week by Reuters\u00a0didn&#8217;t rule out another cut in rates. The consensus was that there was a one in four chance of a cut this week, and a 40 per cent chance of another\u00a0cut &#8220;at some point.&#8221; But the most likely result, said the economists, was a rate freeze till 2017.<\/p>\n<h2>Frozen<\/h2>\n<p>More than a\u00a0year of rates frozen at 0.5 per cent is not a resounding vote of confidence in a Canadian recovery. But in the face of that steady-as-she-goes opinion from economists, another rate cut would be a two-edged sword.<\/p>\n<div class=\"figure\"><img decoding=\"async\" src=\"http:\/\/i.cbc.ca\/1.3150756.1441394935!\/cpImage\/httpImage\/image.jpg_gen\/derivatives\/original_620\/toronto-housing-market.jpg\" alt=\"toronto housing market\" width=\"100%\" \/><\/p>\n<p class=\"figure-caption\">Cutting interest rates would help keep the Canadian property market strong. (Darren Calabrese\/Canadian Press)<\/p>\n<\/div>\n<p>Lower rates would make it easier for Canadians to keep up their borrowing binge, helping retail sales and keeping house prices strong. More usefully, it\u00a0would help secure lending for struggling or expanding businesses.<\/p>\n<p>A byproduct of lower rates is a lower loonie.\u00a0If, as many have said, our shrinking trade deficit can be credited to a low Canadian dollar,\u00a0then a\u00a0still\u00a0lower\u00a0loonie\u00a0could be even better.<\/p>\n<p>&nbsp;<\/p>\n<p>&nbsp;<\/p>\n<p>&#8230;click on the above link to read the rest of the article&#8230;<\/p>\n<p>&nbsp;<\/p>\n<p>&nbsp;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Interest rate cuts a two-edged sword for Bank of Canada: Don Pittis Another decrease could spur exports but would announce serious pessimism Conjure up an image of Bank of Canada governor Stephen Poloz in Hamlet pantaloons, hand to brow, declaiming to the middle distance: &#8220;To cut or not to cut?&#8221; A confusion of contradictory economic [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[942,103,3544,3000,122,4936,1154,943,805],"class_list":["post-11973","post","type-post","status-publish","format-standard","hentry","category-economics","tag-bank-of-canada","tag-canada","tag-cbc","tag-cbc-news","tag-central-bank","tag-don-pittis","tag-interest-rate-policy","tag-stephen-poloz","tag-trade"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/11973","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=11973"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/11973\/revisions"}],"predecessor-version":[{"id":11974,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/11973\/revisions\/11974"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=11973"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=11973"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=11973"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}