Tuesday, 17 January 2012

Rate Cut In Canada Becomes Even Less Likely

Eleven of 12 primary securities dealers in Canada surveyed by Dow Jones say the Bank of Canada's next move is a ways off--but will be a hike, not a cut. And the BoC offers support for that view, reminding the markets today that Canada has "considerable" policy stimulus. "In fact, one new item in the statement was that these favorable financing conditions will buttress consumer spending and housing activity, taking the household-debt-to-income ratio even higher," notes TD economist Leslie Preston. And with Canadians already carrying record debt levels, "the global financial situation would have to become quite dire" for the BoC to adopt easier money policy.