The BOC has decided to maintain overnight rate at a paltry 1/2%
As the article below illustrates, both the BOC and the media continue to disseminate completely contradictory data and are making predictions for future economic outlook based on this very flawed information.
“It does appear that the positive forces at work in the economy are starting to outweigh those that are negative. Non-resource exports are expected to strengthen, but their profile is weaker than previously projected, in part because of slower foreign demand growth and the higher Canadian dollar,” the Bank said. “The economy continues to create net new employment, especially in services, despite job losses in resource-intensive regions. In this context, household spending continues to expand moderately.”
This is crazy. Especially because job losses in resource-intensive regions were jobs that were higher paying then the ones being created by the services sectors. In what world do they foresee restaurant waiters, cashiers to be paid more than the heavily unionized and higher paying jobs that they are replacing?
Sure new employment is being created, but more inferior employment it is intended to replace.
Sure household spending continues to expand, however we pretty much know that that spending is driven by increasing household debt.
Yet in light of this, the media and BOC are forecasting this. Really?
“However, the Central Bank is optimistic the economy will recover, which hints at a potential rate increase in the future.”
The Bank of Canada and media are either out to lunch, overly optimistic or simply full of BS. Which one do you think it is?
http://www.repmag.ca/news/bank-of-canada-announces-overnight-rate-205791.aspx
