Fiscal Cliff
The Bank of Canada meets next Wednesday July 13th and it’s widely expected that we will have another rate increase. However the worry is now that the increase will be too large and start to push us into a recessionary environment. Yes still have sky high inflation with the prices of gas and consumer staples still at record levels. However economists are coming out saying that with the recent retreat of the price of oil that other prices will start to recede as well.
So this brings us back to the next potential rate increase. The US federal reserve increased their over night lending rate by 75 basis points just a few weeks ago and since then the expectation has been that the BOC would follow with the same level of rate change. However the hot real estate market has already started to slow down even though we still have a housing shortage. So any over sized rate increase like the Fed did recently will put us that much closer to falling off a fiscal cliff into a recession.
The objective has always been to increase rates enough to allow for a soft landing of the economy. However with CPI figures remaining stubbornly high has forced the BOC and other central banks to be more aggressive in their approach to increasing rates to tackle inflation. This aggressive stance is pushing us ever closer to the edge of a cliff where we fall into a recession.
It’s a balancing act and one false move could be the one that pushes us off the cliff.
Today I am thankful for the rain overnight, my daughter who has cut my hair since the start of the pandemic and active recovery today so training can resume stronger tomorrow.
I look forward to hearing from you in regard to your mortgage needs.
Patrick
p.s- You can click on this link to start the process whenever you are ready. Schedule your meeting with me here.
p.s.s- I should tell you that I am licensed in Nova Scotia Brokerage (2021-3000179) Broker (2021-3000180), Ontario(M18001555) & in British Columbia(BCFSA #504098).
p.s.s.s You can download my new mortgage app here
