Rates appear to be headed lower. Bank of Canada chief Mark Carney had a press conference and speech earlier today. He’s a sample of what he said:
“Further monetary stimulus will likely be needed”
“Recession is a possibility for Canada.” (consumer confidence is at its lowest since 1982)
“We do see growth picking up in the second half of 2009.”
BoC Deputy Governor Paul Jenkins concurred with Carney’s rate outlook earlier this week when he said: “Some further monetary stimulus will likely be required to achieve our 2 percent inflation target over the medium term.”
Here’s how the credit markets have responded:
According to CEP, credit swap traders are “pricing in” a 100% chance of a 0.25% cut, and a 98% chance of a 0.50% cut by year-end.
TD Securities expects a 1/2% rate cut on December 9
Bloomberg says CIBC economist Avery Shenfeld believes “Carney may ease to 1.75% (from 2.25%) at his next decision on Dec. 9.”
30-day bankers’ acceptance rates (which sometimes lead prime rate changes) are now at 2.46%, down from:
2.52% on October 21 (the date of the BoC’s last 1/4% rate cut); and,
3.05% on October 8 (the date of the BoC’s previous 1/2% rate cut)
The 5-year bond yield (which correlates with fixed mortgage rates) is now at 2.64%, down from 2.84% on October 21.
The Bank of Canada’s next interest rate meeting is 20 days away.