CENTURY 21 Action Power Team Ltd. - Blog

Bank of Canada says Economy hotter than estimated

Stephen George — Thu, 04 Mar 2010 00:00:00 GMT

Economy hotter than estimated, Bank of Canada says

Jeremy Torobin Ottawa — Globe and Mail, Mar. 02, 2010

The Bank of Canada kept its benchmark lending rate at a historic low 0.25 per cent Tuesday, while hinting that

policy makers are on closer guard for shifts in the inflation outlook that might force them to rethink their pledge

to stay on hold through midyear.

In the statement accompanying Tuesday's decision, Governor Mark Carney and his rate-setting panel

acknowledged that growth and inflation have been hotter than policy makers projected in their January forecast,

saying the economy's 5-per-cent growth in the fourth quarter was ``spurred by vigorous domestic spending and

further recovery in exports.”

Also, in a nod to the fact core inflation came in at the central bank's 2-per-cent target in January, sooner than

policy makers had anticipated, they sounded a somewhat more hawkish tone on price gains. The central bank

said the risks to their inflation outlook are now ``roughly balanced,” as opposed to language from previous

statements which had said inflation risks were ``tilted slightly to the downside.”

The bank also added the word ``current” in its key sentence reiterating Mr. Carney's commitment to keep

borrowing costs at their record-low level, suggesting the next decision on April 20 could mark the beginning of

the end of easy money as the central bank prepares to lay out how it plans to tighten in the second half of the

year.

While few economists expect Mr. Carney to raise interest rates before that commitment runs out, recent data

and the current statement suggest there is more pressure on the bank to consider unleashing a series of rate hikes

over several decisions starting in July, or raise rates more steeply than the typical 25-basis point moves.

``Carney and Co. are starting to feel the urge to tighten, not a strong urge now, but an urge nevertheless,”

Michael Gregory, a senior economist with BMO Capital Markets, said in a note to clients. ``We still judge that

the Bank will hike rates 25 basis points on July 20, with rising risks that this and/or subsequent moves could be

in larger increments.''

Core inflation has been ``slightly firmer” than expected, the bank said, as a result of ``both transitory factors and

the higher level of economic activity.” The reference to ``transitory factors” likely refers to recent gains in

prices for automobiles such as trucks, which don't seem sustainable, and housing prices.

Government of Canada Takes Action to Strengthen Housing Financing

Stephen George — Tue, 16 Feb 2010 00:00:00 GMT

Government of Canada Takes Action to Strengthen Housing Financing

The Honourable Jim Flaherty, Minister of Finance, today announced a number of measured steps to support the long-term stability of Canada's housing market and continue to encourage home ownership for Canadians.

"Canada's housing market is healthy, stable and supported by our country's solid economic fundamentals," said Minister Flaherty. "However, a key lesson of the global financial crisis is that early policy action can help prevent negative trends from developing."

The Government will therefore adjust the rules for government-backed insured mortgages as follows:

Require that all borrowers meet the standards for a five-year fixed rate mortgage even if they choose a mortgage with a lower interest rate and shorter term. This initiative will help Canadians prepare for higher interest rates in the future.
Lower the maximum amount Canadians can withdraw in refinancing their mortgages to 90 per cent from 95 per cent of the value of their homes. This will help ensure home ownership is a more effective way to save.
Require a minimum down payment of 20 per cent for government-backed mortgage insurance on non-owner-occupied properties purchased for speculation.

"There's no clear evidence of a housing bubble, but we're taking proactive, prudent and cautious steps today to help prevent one. Our Government is acting to help prevent Canadian households from getting overextended, and acting to help prevent some lenders from facilitating it," said Minister Flaherty. "If some lenders aren't willing to act themselves, we will act. These measures demonstrate the Government is committed to taking action when necessary to support the long-term stability of a sector that is so vital to our economy and the financial well-being of Canadian families."

These adjustments to the mortgage insurance guarantee framework are intended to come into force on April 19, 2010.

SPRING INTO THE MARKET

Susan Duford — Tue, 16 Feb 2010 00:00:00 GMT

Why wait for spring. Now is the time to jump into the housing market, inventory is low and buyers are plentifull. July 1st is the date for the H.S.T to come into effect act now.

NOTTING GATE ORLEANS

Susan Duford — Tue, 16 Feb 2010 00:00:00 GMT

WOW!!! Built in 2000 this spectatular executive home features 6 bedrooms, 4 bathrooms, perfect for the large or blended family. Main floor with family room off the kitchen as well as formal entertaining space, laundry room, and fully finished lower level. Call Susan Duford today for a private showing of this gorgeous home.