{"id":11504,"date":"2019-01-28T11:11:01","date_gmt":"2019-01-28T19:11:01","guid":{"rendered":"http:\/\/www.roryc.ca\/blog\/?p=11504"},"modified":"2019-01-22T11:08:51","modified_gmt":"2019-01-22T19:08:51","slug":"higher-interest-rates-remain-on-the-horizon","status":"publish","type":"post","link":"https:\/\/www.roryc.ca\/blog\/2019\/01\/higher-interest-rates-remain-on-the-horizon\/","title":{"rendered":"Higher Interest Rates Remain on the Horizon"},"content":{"rendered":"<p style=\"text-align: justify;\">The asset management division of Canada\u2019s biggest bank suggests there\u2019s reason to be worried about the country\u2019s housing market \u2014 but despite this, it expects higher interest rates remain on the horizon.<\/p>\n<p style=\"text-align: justify;\">\u201cWe continue to be concerned by the Canadian trifecta of the oil shock, competitiveness challenges and a wobbly housing market,\u201d writes Eric Lascelles, RBC Global Asset Management\u2019s chief economist, in a weekly #MacroMemo.<\/p>\n<p style=\"text-align: justify;\">\u201cDespite this trepidation, cautious rate hiking seems more likely than rate cuts for 2019,\u201d he continues.<\/p>\n<p style=\"text-align: justify;\">The Bank of Canada uses the overnight rate as a tool to keep annual inflation around 2 percent. Around the time of the Great Recession and financial crisis of 2008, the central bank ushered in a period of historically low interest rates for consumers.<\/p>\n<p style=\"text-align: justify;\">This was done in part to cushion against the effects of low oil prices on the Canadian economy. Since July 2017, however, the Bank of Canada has hiked the overnight rate five times.<\/p>\n<p style=\"text-align: justify;\">The current rate of 1.75 percent is the highest in around 10 years, though it\u2019s still far off the double-digit rates seen as recently as the early-\u201990s.<\/p>\n<p style=\"text-align: justify;\">Recent central bank messaging has suggested more rate hikes are on the way, a view widely shared by market watchers. That said, the next increase may not come as soon as some expect.<\/p>\n<p style=\"text-align: justify;\">Lascelles notes how the central bank\u2019s tone changed slightly on January 9th, when it announced it was holding the overnight rate steady for now.<\/p>\n<p style=\"text-align: justify;\">\u201cFrom a language perspective, the Bank of Canada is clearly dragging its heels, adding \u2018over time\u2019 to its prediction that \u2018the policy interest rate will need to rise,\u2019\u201d Lascelles observes.<\/p>\n<p style=\"text-align: justify;\">While high household debt, affordability challenges in major cities, and speculation have created risks for the country\u2019s housing market, there are positive signs that are supportive of resilience.<\/p>\n<p style=\"text-align: justify;\">Oxford Economics, an economic-research firm that analyzes and forecasts trends, recently listed a few reasons it says Canada\u2019s housing market isn\u2019t on track for a crash like the one seen to the south of the border a decade ago.<\/p>\n<p style=\"text-align: justify;\">For one, Canadian incomes are projected to grow in the coming years. Meantime, the vast majority of borrowers in the country aren\u2019t falling far behind on their mortgage payments.<\/p>\n<p style=\"text-align: justify;\">\u201cThere are some positive trends in Canada\u2019s household finances,\u201d writes Tony Stillo, Oxford Economics\u2019 director of Canada Economics, in a Research Briefing.<\/p>\n<p style=\"text-align: justify;\"><a href=\"https:\/\/www.livabl.com\/2019\/01\/canadian-housing-concerns-higher-interest-rates-way-economist.html\">Despite Canadian Housing Concerns, Higher Interest Rates on The Way<\/a> by Josh Sherman | Livabl<\/p>\n","protected":false},"excerpt":{"rendered":"<p>The asset management division of Canada\u2019s biggest bank suggests there\u2019s reason to be worried about the country\u2019s housing market \u2014 but despite this, it expects higher interest rates remain on &hellip; [<a href=\"https:\/\/www.roryc.ca\/blog\/2019\/01\/higher-interest-rates-remain-on-the-horizon\/\">read more<\/a>]<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[9],"tags":[],"class_list":["post-11504","post","type-post","status-publish","format-standard","hentry","category-mortgage"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.4 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Higher Interest Rates Remain on the Horizon &#8226; 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