# Bank of Canada will cut interest rates again on Sept. 9



## 1980z28 (Mar 4, 2010)

Nice,more free cash,will leverage below what ever prime will be set at


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## emmaj855 (Aug 31, 2015)

*Good News*

Good for people seeking mortgages and loans. Still there are lenders that are providing in lesser rate of interest.


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## Guban (Jul 5, 2011)

The global race to devalue currencies continues...

Why spend responsibly when you can drive down borrowing costs?


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## Fraser19 (Aug 23, 2013)

Is this verified or what you are speculating?


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## CPA Candidate (Dec 15, 2013)

I don't think you will see a third cut.


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## swoop_ds (Mar 2, 2010)

Hopefully this doesn't happen but it sounds likely that it will from what I've read.

When will they realize that lowering the rate is a terrible idea?

Who is out there begging for more inflation? I haven't heard any of my friends saying "Boy I wish I could pay more for stuff". And as for the dollar, do we really want to lower it MORE? I'm pretty sure it's already low enough that it's attracting whoever it's going to attract to come here and buy our crap.


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## cashinstinct (Apr 4, 2009)

I should be breaking my fixed rate mortgage and going variable if they cut rates again (penalty estimated by First National at $3,000... my savings in interest for the next 2 years would be a little more than $3,000 with current rates).


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## kork (Jun 9, 2012)

cashinstinct said:


> I should be breaking my fixed rate mortgage and going variable if they cut rates again (penalty estimated by First National at $3,000... my savings in interest for the next 2 years would be a little more than $3,000 with current rates).


Yeah, the problem is that for the last two rate drops, my variable rate has only dropped .15 of the .25 each time. I'll bet when the rates go back up though, they'll jack it up the full rate!

If I knew that was the case, I might have locked it because now it's a lottery I can't control. I thought "BOC goes down .25%... so does my mortgage..." NOPE! I guess I learned.


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## My Own Advisor (Sep 24, 2012)

Hopefully this happens...renewing this fall. 

Would you go 5-year variable or 3-year variable folks? Why or why not?


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## agent99 (Sep 11, 2013)

It's only a prediction:

http://business.financialpost.com/i...-rates-again-on-sept-9-national-bank-predicts


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## emmaj855 (Aug 31, 2015)

*Not confirmed yet*

Not confirmed yet. Just a prediction for now.

24news.ca/the-news/economic-news/157228-bank-of-canada-will-cut-interest-rates-again-on-sept-9-national-bank-predicts



Fraser19 said:


> Is this verified or what you are speculating?


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## andrewf (Mar 1, 2010)

What I think will be interesting is if/when BoC hits the zero lower bound again, will they implement QE to further loosen monetary policy. It remains to be seen how soft the economy is.


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## nobleea (Oct 11, 2013)

My Own Advisor said:


> Hopefully this happens...renewing this fall.
> 
> Would you go 5-year variable or 3-year variable folks? Why or why not?


The difference between the 3 yr fixed and variable is only about 0.24%. 
For the 5yr term, the difference is closer to 0.5%.

It's all dependent on when rates go up and how much/fast. But getting a fixed rate as low as 2.15% is unheard of.


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## CPA Candidate (Dec 15, 2013)

swoop_ds said:


> Hopefully this doesn't happen but it sounds likely that it will from what I've read.
> 
> When will they realize that lowering the rate is a terrible idea?
> 
> Who is out there begging for more inflation? I haven't heard any of my friends saying "Boy I wish I could pay more for stuff".


June 2014 to July 2015 inflation was 1.3%. It's pretty tame.

I'd be against a cut because it I don't believe it actually works and would further decimate the dollar. Households don't have much room to increase their debts. Now, businesses could use lower capital to expand and hire, but that's not how they work anymore. Since the crisis of 2008, businesses have hunkered down and are run leaner than ever. If they use debt it is to buyback shares or increase dividends, not to grow organically. Or they use it to make acquisitions which inevitably leads to job cuts; consolidation is negative for employment. Or they just sit on hoards of cash.

Economists are stuck in the good old days where businesses felt they were a part of our society and were a force of good and prosperity. Businesses are now run "shareholder friendly" which means unfriendly to other stakeholders. This is my thesis on why the economy is so tepid and weak. People are under-employed and underpaid and have no ability to consume other than borrowing. Now that balance sheets are maxed out, we are set for Japan-like growth for years to come.


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## sags (May 15, 2010)

Where might Canada's Finance Minister be these days ?


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## andrewf (Mar 1, 2010)

Decimating the dollar is part of the solution. Increase exports, decrease imports.


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## sags (May 15, 2010)

Will another puny interest rate cut make a difference ?

It is all political theatre. The central banks have lost control and don't know what to do.

Vote for the politician with the biggest spending package now. It is all we have left and we might as well go down swinging for the fence.


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## My Own Advisor (Sep 24, 2012)

We're all doomed if we (our government) spends more sags....no?


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## sags (May 15, 2010)

Bad if we do...........worse if we don't.

But if we have to spend, Canada has plenty of needs to spend it on. Infrastructure deficits have been growing for years.


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## james4beach (Nov 15, 2012)

sags said:


> The central banks have lost control and don't know what to do.


I agree, and I also worry about what the central banks have been secretly doing behind our backs, and not disclosing.

For instance, we know that the CME has something called the Central Bank Incentive Program. It's on their damned web site, and is a facility to allow central banks to trade index futures. Clearly, at least one central bank is manipulating stock index futures and pumping printed money into index futures. This is a way to levitate markets before openings, and is a direct price manipulation of the stock market.

It can be very effective because overnight futures have low volume, and the high leverage of index futures allows a little bit of money to have a significant effect. This makes it a natural target for central bank intervention.

Normally one would dismiss these things as conspiracy theories, except (a) the Central Bank Incentive Program exists, and (b) the Federal Reserve has been caught holding dark secrets before. In 2011, Bloomberg filed a Freedom of Information request to learn about secret bailout facilities. The Federal Reserve rejected the request. Bloomberg then filed federal lawsuits to force disclosure, and only then did we learn about the Federal Reserve's secret bank bailout facilities, including large emergency loans to big Canadian banks.

Keep in mind that the Federal Reserve kept this intervention a secret for over 3 years, until lawsuits forced them to reveal details. They actively fought FOI requests. This is not an open and honest organization.

So again, I wonder what games they're involved with right now. How much money have central banks pumped into stock index futures? What other weird trades are they involved with?

As an investor, you must realize that when the central bank drives up the price of index futures, _they are screwing you_. You are being forced to buy at a higher price than the market naturally provided.


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## My Own Advisor (Sep 24, 2012)

nobleea said:


> The difference between the 3 yr fixed and variable is only about 0.24%.
> For the 5yr term, the difference is closer to 0.5%.
> 
> It's all dependent on when rates go up and how much/fast. But getting a fixed rate as low as 2.15% is unheard of.


Very true. I guess I worry about the IRD if we decide to move within 5 years. We have no plans but you never know. 

We're in a 5-year fixed product now up for renewal around 3%. I figure if we stay variable for the next five years, I can get prime - 0.70 (2%), and prime rates only move up 50 basis points, then my mortgage is only 2.50% and I'm still ahead of what I'm paying now.


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## jollybear (Jun 28, 2015)

Would an interest rate cut of this size impact bond etf values? I`m currently in the process of rebalancing and wondering if I should act faster/slower with a Sept.9 date approaching? (Going to be purchasing Vanguard`s Canadian Aggregate Bond ETF)


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## peterk (May 16, 2010)

This is a ridiculous thread title, and should be changed, either by OP or mods.


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## 1980z28 (Mar 4, 2010)

peterk said:


> This is a ridiculous thread title, and should be changed, either by OP or mods.


Just passing on info,sorry to upset your opinion

https://www.google.ca/url?sa=t&rct=...edicts&usg=AFQjCNH9XesLzNbncDaduoZloquhl-HXCw


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## sags (May 15, 2010)

I agree J4B.

The best way to discourage investigation is to label it a "conspiracy theory", which of course they are until the truth comes out.

Ron Paul has wanted to audit the Fed for years. It isn't going to happen.

Perhaps former Chairman Alan Greenspan knows something though. He has been subtly warning of huge bubbles in bonds and equities.

He recently gave an interview where he observed that in 2008 world liquidity dried up completely in a matter of a couple of minutes.

He seems concerned about something..........but just can't come out and say it.

I hear on the news today that the probe into Hillary Clinton's emails is getting interesting.

If there is "nothing" there...........there sure is a lot of scrambling around trying to hide "nothing."


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## peterk (May 16, 2010)

1980z28 said:


> Just passing on info,sorry to upset your opinion
> 
> https://www.google.ca/url?sa=t&rct=...edicts&usg=AFQjCNH9XesLzNbncDaduoZloquhl-HXCw


Perhaps you should put a bit more effort into the threads you start and at least provide the links to the news stories you wish to discuss (and also provide some discussion). Instead of a false thread title and a one sentence statement that has no context...


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## Davis (Nov 11, 2014)

1980z28 said:


> Just passing on info,sorry to upset your opinion
> 
> https://www.google.ca/url?sa=t&rct=...edicts&usg=AFQjCNH9XesLzNbncDaduoZloquhl-HXCw


1980z28: by dropping "National Bank predicts", you turned an accurate newspaper headline into a misleading thread title. We do not know that the Bank if Canada will cut the interest rate, and it is patently false to say this. 

All we know is that one of the six big chartered banks has predicted a cut. The other five have not.


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## OnlyMyOpinion (Sep 1, 2013)

This is the latest I read. But of course it is a forecast so it will be wrong  
*Canada to keep interest rates on hold until 2017: Reuters poll*
While the median forecast from 40 economists suggests no change in rates on Sept. 9, forecasters pegged the probability of another 25 basis point cut at one-in-four, particularly after the bank's first rate cut this year in January was unexpected....
From there, the Canadian central bank is expected to stand pat until the first quarter of 2017 when it is likely to raise rates, further out than the fourth quarter of 2016 hike predicted in a July poll that was taken before the last rate cut.
http://ca.reuters.com/article/businessNews/idCAKCN0R31MF20150903?sp=true


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## james4beach (Nov 15, 2012)

There are actually real predictions of this that are market-based. The Montreal Exchange has interest rate derivative contracts, notably the Overnight Index Swap Futures (OIS).
https://www.m-x.ca/produits_taux_int_ois_en.php

The value of this contract is based on the Bank of Canada rate, and therefore (by efficient market theory) the market price set by traders will predict the Bank of Canada overnight rate.

Unfortunately, I don't know how to read this. But this is a far better prediction than a survey of economists, if only you know how to read it  Another example of how the little guy never has access to the best information or knowledge.


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## jollybear (Jun 28, 2015)

I'll rephrase my question........."Hypothetically speaking" would an interest rate cut of this size impact bond etf values? I`m currently in the process of rebalancing and wondering if I should act faster/slower with a Sept.9 date approaching? (Going to be purchasing Vanguard`s Canadian Aggregate Bond ETF)


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## My Own Advisor (Sep 24, 2012)

I wouldn't think that much. Bond prices will go up a bit if rates lower, lower yields to be expected with a 25 basis point cut.


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## nobleea (Oct 11, 2013)

My Own Advisor said:


> Very true. I guess I worry about the IRD if we decide to move within 5 years. We have no plans but you never know.
> 
> We're in a 5-year fixed product now up for renewal around 3%. I figure if we stay variable for the next five years, I can get prime - 0.70 (2%), and prime rates only move up 50 basis points, then my mortgage is only 2.50% and I'm still ahead of what I'm paying now.


You should not be comparing to what your rate is now. You should be comparing fixed vs variable for various scenarios. You can add in probability of moving with 3 or 5 years too to figure out the most likely scenario. Some banks will allow a blend - ie 50% of the mortgage at 3yr variable and 50% at 3yr fixed.


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## jollybear (Jun 28, 2015)

My Own Advisor said:


> I wouldn't think that much. Bond prices will go up a bit if rates lower, lower yields to be expected with a 25 basis point cut.


Thanks for answering


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## james4beach (Nov 15, 2012)

Today I bought a 5 year GIC at 2.15% (from big five bank). I continue to think that a GIC ladder, in which you always buy 5 year GICs, is a good strategy for your fixed income.

The rate seems attractive, and I'm happy to lock in the rate. For some context, the 5 year Government of Canada benchmark bond is 0.76%. And XBB ytm (before fees) is 1.95% which is for 10 year maturity exposure.


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## gibor365 (Apr 1, 2011)

james4beach said:


> Today I bought a 5 year GIC at 2.15% (from big five bank). I continue to think that a GIC ladder, in which you always buy 5 year GICs, is a good strategy for your fixed income.
> 
> The rate seems attractive, and I'm happy to lock in the rate. For some context, the 5 year Government of Canada benchmark bond is 0.76%. And XBB ytm (before fees) is 1.95% which is for 10 year maturity exposure.


Just curious why not PT where you get 2.6%?

I partially broke my ladder and taking advantage of 3% HISA tangerine promo until end of Sept


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## james4beach (Nov 15, 2012)

gibor said:


> Just curious why not PT where you get 2.6%?


I get a similar high rate to that with my credit union, but yes I agree one should make use of those higher rates. I basically diversify between the credit unions and big five banks. I just perceive the Big Five as too-big-to-fail so I make sure I mix up exposure between the credit union (or PT maybe) and the Big Five.


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## gibor365 (Apr 1, 2011)

imho if bank insured under CDIC and you don't exceed 100K/account, you shouldn't have any problem....
Also remeber, PCF belong to CIBC, Tangerine to BNS ... and they offer much better rates... I have now much more than 100K threshold in Tangerine and don't worry...


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## 0xCC (Jan 5, 2012)

No rate cut...

http://www.bankofcanada.ca/2015/09/fad-press-release-2015-09-09/


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## cashinstinct (Apr 4, 2009)

0xCC said:


> No rate cut...
> 
> http://www.bankofcanada.ca/2015/09/fad-press-release-2015-09-09/


Good, I don't see why it would need to go down again.


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## Cal (Jun 17, 2009)

^, yeah especially when the US has already indicated they will begin raising rates by year end. If they raise rates, that will have similar effect to us lowering.


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## brad (May 22, 2009)

agent99 said:


> It's only a prediction:
> 
> http://business.financialpost.com/i...-rates-again-on-sept-9-national-bank-predicts


A nice lesson in the reliability of predictions.


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## james4beach (Nov 15, 2012)

I really doubt the US will raise rates by any appreciable amount. Maybe by a quarter point or something, but the global financial market is _so addicted_ to the zero Fed rate, that they really can't raise it by any "normal" amount. It will cause every asset class on earth to get dumped.

I doubt you will ever see 6% Fed overnight rates again... bye-bye normal rates. Hello perpetual emergency.

I believe, like others, that the US Fed is now in a zero rate trap. They are stuck there forever, just like Japan got stuck there.


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## lonewolf (Jun 12, 2012)

The cycles will push rates higher. The markets will demand a higher rate as the risk of presumed default rises. The fed is no match for mass emotions they are simply part of the cycle. History will repeat every bubble has burst as will the bond bubble. The bull market in cash marches on.


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## james4beach (Nov 15, 2012)

Ah yes, the market determines the rate in the bond market and the money markets, but only the Federal Reserve determines the overnight Fed funds rate. What I mean is that the Fed funds rate (overnight target) will stay near zero.

I agree that eventually the market will set bond yields higher. That's a separate thing.


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## humble_pie (Jun 7, 2009)

sorry to wander off-topic into US rates, but seeing as how others are daring to go ...

isn't there a possibility the US will raise rates in order to lure back some of those dollars when China dumped a portion of its US treasuries a few months ago?

longstanding chinese investment in US bonds has been a bedrock, no one wants to see this break down


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## lonewolf (Jun 12, 2012)

The fed follows the 3 month T bill rate in their rate increases & decreases.

My understanding was The fed is a private bank there main concern is to make money. Control the economy through interest rates is just smoke & mirrors.


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## gardner (Feb 13, 2014)

lonewolf said:


> The fed is a private bank there main concern is to make money.


Sort of. The fed is controlled through its board by a bunch of private banks, and it's objective is firstly to make the executives of those private banks as rich as possible. The fed itself does not need to make money for its controllers to become enriched.


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## james4beach (Nov 15, 2012)

humble_pie said:


> isn't there a possibility the US will raise rates in order to lure back some of those dollars when China dumped a portion of its US treasuries a few months ago?


I think that would be the case if the US dollar was weak. If the US dollar was too weak and there was a danger of a flight from US dollars, then raising rates would lure people back.

But the US dollar is incredibly strong. It's because Europe and emerging markets are so weak that money is flowing back into the US anyway. I don't see any reason the Fed has to do anything to lure money back... it seems to naturally be coming to America anyway


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