Here's an article that may interest you. Interest rates are at an all time low - an absolutely perfect time to talk to your mortgage broker and get locked in to a great rate.
With any luck, these extreme measures are going to lend a hand getting the Canadian Real Estate markets back on track. Most people do believe we are at the bottom of the market now - meaning, in all honesty, this could be the best time to buy.
All the best,
Neacol
Bank of Canada cuts interest rate to lowest ever
Updated: Tue Mar. 03 2009 11:59:44
CTV.ca News Staff
Bank of Canada governor Mark Carney cut the interest rate Tuesday to 0.5 per cent, the lowest ever, in yet another attempt to stimulate the sluggish economy.
The rate cut, the seventh in the last year, was widely expected by economists.
"Consistent with returning total (consumer price index) inflation to 2 per cent, the target for the overnight rate can be expected to remain at this level or lower at least until there are clear signs that excess supply in the economy is being taken up," Carney said in a statement.
The move comes a day after Statistics Canada released dismal numbers that prove Canada is in a deep recession.
The Statistics Canada report indicated that Canada's economy shrank by 3.4 per cent in the last quarter of 2008.
That is the biggest decline since the recession of 1991 and sparked a significant drop in the markets on Monday. Toronto's S&P/TSX composite index fell 435.51 points, or 5.36 per cent, to 7,687.51, its lowest point since 2003.
Ignatieff asks PM to define position on economy
The precise state of the Canadian economy continues to be a topic of debate in the House of Commons.
On Tuesday afternoon, Liberal Leader Michael Ignatieff asked the prime minister to define exactly what the Canadian economy is going through.
"Canadians deserve a clear message from their prime minister about this economic crisis," Ignatieff said.
"Sometimes he says we're in a recession, sometimes it's a depression, in September it wasn't even going to happen at all. This weekend on CNN, the prime minister called it a 'cyclical downturn, but nothing that requires government intervention.'"
In response, Prime Minister Stephen Harper said his quotes regarding government intervention had been taken out of context by the Liberal leader.
"If the honourable member will look closely at the transcript of that interview, he will see that I was speaking specifically of the mortgage sector," Harper said.
When pressed by Ignatieff to define the challenges facing the economy as a recession, depression or cyclical downturn, the prime minister said "the economic plan of the minister of finance has spoken very clearly about the government's views on this and our action plan to deal with it."
Rate cut impact may take time
While rate cuts are designed to have a stimulative effect on the economy, most experts believe the cut will have a minimal impact.
The central bank has cut its rate from 4.5 per cent 15 months ago to 0.5 per cent, to little effect.
Peter Drake of Fidelity Investments said after the announcement that it could take anywhere from 12 to 18 months for interest rate cuts to take effect, which means today's announcement won't provide immediate relief.
Drake said that a cut to the main interest rate will hopefully ripple through the spectrum of interest rates and therefore stimulate the economy.
"The idea is that it will influence other rates, the rates at which banks lend to people and to commercial customers and indeed to each other," Drake said during an interview on CTV Newsnet.
After Carney's announcement, Canada's major banks -- Royal Bank, Bank of Montreal and CIBC -- said they would cut their prime rates in step with the central bank.
In his statement, Carney also seemed to back away from his January economic outlook report, which suggested that Canada's economy would begin to recover in late 2009.
He had predicted that the economy would start growing by an annualized two per cent in the third quarter of 2009 and record an average growth of 3.8 per cent in 2010.
On Tuesday, Carney acknowledged that economies around the world are performing more poorly than anticipated, and said the Canadian economy will likely decline more sharply in early 2009 than previously predicted.
Carney now suggests the recession could last until 2010.
"The effects of the recent aggressive monetary and fiscal policy actions in Canada and other major economies will begin to be felt in the second half of this year and will build through 2010," Carney said. "Once the global financial system stabilizes and global growth recovers, the underlying strength of the Canadian economy and financial sector should ensure a more rapid recovery in Canada than in most other industrialized economies."
Carney also said it is possible that the Bank may provide additional stimulus, if necessary, by purchasing credit and other assets.
However, the Bank will not offer details on such plans until its April Monetary Policy Report.
With files from The Canadian Press
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