Canada column for Sunday, Oct. 27/13
THE CANADIAN REPORT
(c) By Jim Fox
Canadians can expect interest rates to stay where they are – or even be cut further – over the next several years, the Bank of Canada said.
The comment triggered a sell-off of Canadian dollars that pushed the currency almost two cents U.S. lower than a week ago.
The bank’s monetary policy report also lowered anticipated economic growth.
“The statement is making it clear we have balanced the risks,” new bank governor Stephen Poloz said.
Previous bank statements cautioned consumers about over-borrowing but this time it was suggested there could be cuts to the 1-percent key rate that’s been in place for more than three years.
Continued weakness in exports with restrained spending on machinery and equipment is a major concern keeping inflation below target.
The bank cited fiscal turbulence in the U.S. and continued weak global demand that have kept Canada’s exports from rebounding.
A concern for the government has been the risk of reigniting the housing market through increased borrowing that could cause problems for consumers when interest rates begin rising again.
(For more Canadian news for the week, click "Read More")