Bank of Canada downgrades Canadian economy


mentalfloss
+1
#1
Well there you have it.



OTTAWA – The Bank of Canada says the economy is not doing as well as expected and will likely need stimulative monetary policy to stay in place for longer than previously thought to create the conditions for a sustainable recovery.

In a mostly dovish monetary policy report, the bank’s governing council kept in place Wednesday the one per cent trendsetting interest rate that is responsible for some of the lowest borrowing costs in memory. The rate has remained unchanged for almost four years.

But it is the downgrading of expectations for the economy that is likely to catch the markets’ attention.

The bank cut its April projections for global growth this year by four-tenths of a point to 2.9 per cent and for the U.S. — Canada’s most important foreign market — by more than a full point to 1.6 per cent.

The effect on Canada was less dramatic, but still significant. Economic growth projections for 2014 and 2015 were trimmed by one-tenth of a point — to 2.2 and 2.4 per cent respectively.

As well, the bank set further back to mid-2016 the target date for the economy to return to full capacity, suggesting that whatever timeframe markets had for the next interest rate hike, it is likely now to occur three months later.

For Canada, that will further delay the expected pickup in exports and business investment the bank had been counting on to put economy on a sustainable growth path.

Another key change from April is that Bank of Canada governor Stephen Poloz does not appear to be as worried about the risk of super-low inflation, acknowledging that consumers prices have risen faster and higher than it anticipated.

But the bank remains convinced that the recent pick-up to 2.3 per cent, slightly above target, is driven by temporary factors, specifically a bump in oil prices, pass-through from the stronger loonie, and heightened competition within Canada’s retail sector.

Its forecast for inflation to hover around two per cent for the next two and a half years, and for core underlying inflationary pressures to remain below the two per cent target until 2016.

While the bank remains upbeat about the future, it is forthcoming about the soft spots in the Canadian economic landscape, particularly on the jobs front.

It points out that the economy has only managed to eke out about 6,000 jobs a month over the past year, but that the record is actually worse than even that modest number suggests. If not for tens of thousands of Canadians dropping out of the work force, the unemployment rate would be higher than the current 7.1 per cent.

There are about 100,000 fewer people in the prime 25-54 years work-age currently employed or looking for work today than there were six months ago, the bank noted.

“Continuing labour market slack is also reflected in subdued increases in wages,” it added.

The outlook for exports and business investment, which the bank sees as connected, is also not strong, it said.

“The recovery in exports over the projection horizon will continue to be drawn out,” it said. “The expected strong growth in energy exports and the return of growth to non-energy exports (such as manufacturing) will not be sufficient to fill the shortfall left by the weak performance of non-energy exports relative to foreign activity since the end of 2011.

Bank of Canada downgrades Canadian economy (external - login to view)
 
captain morgan
Bloc Québécois
+2
#2
This is a direct result of select Canadian jurisdictions performing poorly as a result of bad prov policies
 
mentalfloss
#3
This is a Canadian problem whether you like it or not.
 
Tecumsehsbones
#4
Well, if the cause is bad provincial policies, maybe the solution is to Federalise policy-making. I'm sure folk in the Maritimes and the West will be much happier with Ottawa's policies than their local policies.
 
captain morgan
Bloc Québécois
#5
Quote: Originally Posted by mentalflossView Post

This is a Canadian problem whether you like it or not.


Are you advocating that the Feds should run the show in areas that are in trouble financially?

... Maybe that's not a bad idea
 
mentalfloss
#6
I'm suggesting that the Feds should be conscientious of the fact that each province and territory has something worthwhile to contribute to the entire country.
 
Tecumsehsbones
#7
Quote: Originally Posted by mentalflossView Post

I'm suggesting that the Feds should be conscientious of the fact that each province and territory has something worthwhile to contribute to the entire country.

Even Quebec?
 
captain morgan
Bloc Québécois
#8
Quote: Originally Posted by mentalflossView Post

I'm suggesting that the Feds should be conscientious of the fact that each province and territory has something worthwhile to contribute to the entire country.


Great... Contribute 'til your heart's content
 
Walter
#9
What downgrade? The article says nothing about a downgrade.
 
Locutus
#10
Quote: Originally Posted by mentalflossView Post

The key reasons for the downgrade, said the bank, is that the world and particularly U.S. had an “abrupt slowing” at the start of this year — the American economy actually shrank by an eye-popping 2.9 per cent — and while growth has resumed, the bounce-back is not sufficient to make up for what has been lost.

and so Stephen Harper.

you're a hoot kid.

stay mad my friend.
 
captain morgan
Bloc Québécois
+2
#11
Breaking News:

Kitten stuck in tree....

Storm clouds on the horizon....

Harper grilled in Parliament for not passing legislation banning trees..
 
mentalfloss
#12
Bank of Canada cuts forecast amid ‘serial disappointment’ with economy’s recovery | Financial Post (external - login to view)
 
taxslave
No Party Affiliation
+1
#13
Quote: Originally Posted by mentalflossView Post

Well there you have it.



OTTAWA – The Bank of Canada says the economy is not doing as well as expected and will likely need stimulative monetary policy to stay in place for longer than previously thought to create the conditions for a sustainable recovery.

In a mostly dovish monetary policy report, the bank’s governing council kept in place Wednesday the one per cent trendsetting interest rate that is responsible for some of the lowest borrowing costs in memory. The rate has remained unchanged for almost four years.

But it is the downgrading of expectations for the economy that is likely to catch the markets’ attention.

The bank cut its April projections for global growth this year by four-tenths of a point to 2.9 per cent and for the U.S. — Canada’s most important foreign market — by more than a full point to 1.6 per cent.

The effect on Canada was less dramatic, but still significant. Economic growth projections for 2014 and 2015 were trimmed by one-tenth of a point — to 2.2 and 2.4 per cent respectively.

As well, the bank set further back to mid-2016 the target date for the economy to return to full capacity, suggesting that whatever timeframe markets had for the next interest rate hike, it is likely now to occur three months later.

For Canada, that will further delay the expected pickup in exports and business investment the bank had been counting on to put economy on a sustainable growth path.

Another key change from April is that Bank of Canada governor Stephen Poloz does not appear to be as worried about the risk of super-low inflation, acknowledging that consumers prices have risen faster and higher than it anticipated.

But the bank remains convinced that the recent pick-up to 2.3 per cent, slightly above target, is driven by temporary factors, specifically a bump in oil prices, pass-through from the stronger loonie, and heightened competition within Canada’s retail sector.

Its forecast for inflation to hover around two per cent for the next two and a half years, and for core underlying inflationary pressures to remain below the two per cent target until 2016.

While the bank remains upbeat about the future, it is forthcoming about the soft spots in the Canadian economic landscape, particularly on the jobs front.

It points out that the economy has only managed to eke out about 6,000 jobs a month over the past year, but that the record is actually worse than even that modest number suggests. If not for tens of thousands of Canadians dropping out of the work force, the unemployment rate would be higher than the current 7.1 per cent.

There are about 100,000 fewer people in the prime 25-54 years work-age currently employed or looking for work today than there were six months ago, the bank noted.

“Continuing labour market slack is also reflected in subdued increases in wages,” it added.

The outlook for exports and business investment, which the bank sees as connected, is also not strong, it said.

“The recovery in exports over the projection horizon will continue to be drawn out,” it said. “The expected strong growth in energy exports and the return of growth to non-energy exports (such as manufacturing) will not be sufficient to fill the shortfall left by the weak performance of non-energy exports relative to foreign activity since the end of 2011.

Bank of Canada downgrades Canadian economy (external - login to view)

The underlying statement here is that we must stop depending on the US to keep our economy strong. We are loosing out on billions of dollars in exports and all the jobs that go with them because a few NIMBYs don't want pipelines to the coast.
 
Count_Lothian
#14
Quote: Originally Posted by taxslaveView Post

The underlying statement here is that we must stop depending on the US to keep our economy strong. We are loosing out on billions of dollars in exports and all the jobs that go with them because a few NIMBYs don't want pipelines to the coast.

Instead of pipelines to the coast, how about creating electric cars and all that goes with it.
 
Tecumsehsbones
+4
#15  Top Rated Post
Quote: Originally Posted by Count_LothianView Post

Instead of pipelines to the coast, how about creating electric cars and all that goes with it.

The extension cords tend to get all tangled. It's a huge hassle.
 
taxslave
No Party Affiliation
+1
#16
Quote: Originally Posted by Count_LothianView Post

Instead of pipelines to the coast, how about creating electric cars and all that goes with it.

We already have them. Big mining equipment also runs almost exclusively on electric power. Ready to start building Site C?
Any ideas on how to export electricity by ship? Then we could build more coal generating stations here and create even more jobs by exporting a value added product.

Quote: Originally Posted by TecumsehsbonesView Post

The extension cords tend to get all tangled. It's a huge hassle.

Got that one covered. Use the same wires the busses use.
 
mentalfloss
#17
Everybody gets a downgrade!

Moody’s downgrades Canadian banks | Advisor.ca (external - login to view)
 
petros
#18
From the article's "related" links....Biz owners predict slow but steady growth | Advisor.ca (external - login to view)

.
Quote: Originally Posted by mentalflossView Post

Everybody gets a downgrade!

Moody’s downgrades Canadian banks | Advisor.ca (external - login to view)

Everybody is a Canadian bank?

Quote:

Moody’s is lowering its outlook on big Canadian banks to negative because of the federal government’s “bail-in” rule, reports CBC

Nothing about the economy in the article just the title? Why?
 
JLM
No Party Affiliation
+2
#19
Quote: Originally Posted by mentalflossView Post

Well there you have it.



OTTAWA – The Bank of Canada says the economy is not doing as well as expected and will likely need stimulative monetary policy to stay in place for longer than previously thought to create the conditions for a sustainable recovery.

In a mostly dovish monetary policy report, the bank’s governing council kept in place Wednesday the one per cent trendsetting interest rate that is responsible for some of the lowest borrowing costs in memory. The rate has remained unchanged for almost four years.

Bank of Canada downgrades Canadian economy (external - login to view)


I think things would look a lot different if we could just get a couple of hundred thousand bureaucratic parasites off the public t*t.
 
mentalfloss
-1
#20
Quote: Originally Posted by JLMView Post

I think things would look a lot different if we could just get a couple of hundred thousand bureaucratic parasites off the public t*t.

Short term solution that screws us over when the economy tanks again and we don't have government left to deal with it.
 
Tonington
+1
#21
Meh, changes in the business cycle since the last forecast. A trim in growth by 0.2 for 2104 and 2015...the next time the forecast is out we could be up by that much. The root mean square errors in the forecasts from Bank Of Canada models (external - login to view) for four quarters out are more than 0.2
 
JLM
No Party Affiliation
#22
Quote: Originally Posted by mentalflossView Post

Short term solution that screws us over when the economy tanks again and we don't have government left to deal with it.


As if they did anything the last time it tanked! (Or the time before)
 
taxslave
No Party Affiliation
+1
#23
Quote: Originally Posted by JLMView Post

I think things would look a lot different if we could just get a couple of hundred thousand bureaucratic parasites off the public t*t.

Or more importantly if they are not going to help grow the economy at least stay out of the way.

Quote: Originally Posted by JLMView Post

As if they did anything the last time it tanked! (Or the time before)

Collected healthy paycheques while telling the rest of us to pay the bill and starve.
 
petros
+1
#24
Opening export bottlenecks will change things soon enough. When AP Gateway construction, intermodal facilities, rail and road infrastructure winds down exports will explode and assembly for export jobs galore.

Projects this massive take decades to complete.

Wait ten years and there will be prosperity abound.

Better yet invest the the west and increase wealth along the way with retirement grade dividends that can be passed on to the next generations
 
Walter
#25
The article says Canadian banks are downgraded but then it says the individual banks are not downgraded. Is this a case of the sum being LESS than the parts?
 
petros
#26
It's punishment for cracking down on Rightie bailouts passed by the Righties.
 
captain morgan
Bloc Québécois
+1
#27
Quote: Originally Posted by petrosView Post

It's punishment for cracking down on Rightie bailouts passed by the Righties.

Canadian banks have been acquiring US banking assets over the last few years... An econ turn-around will have a magnified effect at that point
 
petros
#28
Quote: Originally Posted by captain morganView Post

Canadian banks have been acquiring US banking assets over the last few years... An econ turn-around will have a magnified effect at that point

Wasn't the conspiracy supposed to be US banks buying out Canadian? Doesn't TD have stadium rights somewhere down there?
 
captain morgan
Bloc Québécois
#29
They have their name on the Boston stadium.

In terms of the US banks, O believe that the Fed restrictions were the blocks that made a take-over difficult.

That said, all we would need to do is take a look at the shareholder lists and count the number of American individuals and corps that own the Canuck banks
 
petros
#30
Quote: Originally Posted by captain morganView Post

They have their name on the Boston stadium.

In terms of the US banks, O believe that the Fed restrictions were the blocks that made a take-over difficult.

That said, all we would need to do is take a look at the shareholder lists and count the number of American individuals and corps that own the Canuck banks

Or which US and Canadian institutions the GoC bought into through various funds. It's ready to find the SEC edgar searches. All GoC US investments are listed.
 
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