• Well the Bank of Canada is coming with its additional meeting as to whether they well decrease the overnight lending rate. At Robert Floris’s we boldly predicted they would keep the rates the same the last time.We were wrong. I will take another educated guess and predict they will not decrease rates this time. Rates , especially mortgage rates are already darn low. To the government, l say fix the economy. In Hamilton there are jobs but not a large quantity of high paying jobs. Our city can really stabilize our Hamilton area with a solid economy which will be the backbone for our housing industry. If the Bank of Canada does lower our rates it will be an indication of our economy. As well watch our dollar drop some more, if rates are lowered.

    By Greg Quinn, Bloomberg News Bloomberg
    OTTAWA, Ontario — Bank of Canada Governor Stephen Poloz has made the central bank’s interest rate decision on Wednesday one of the closest watched since the financial crisis after his mixed messages on the possibility of further stimulus.

    Poloz told an audience in London, Ontario, last week his January rate cut to 0.75 percent buys the central bank time to “see how the economy actually responds” after oil’s plunge dimmed the outlook. That confounded economists who had expected more cuts after the governor said at the rate announcement he would take out more insurance if necessary.

    Only four out of 19 economists now expect a rate cut, according to a Bloomberg survey, compared with 12 out of 21 on Feb. 13. A rally in two-year government bonds has stalled.

    “We see this call as very close to a coin toss,” said David Tulk, chief Canada macro strategist at Toronto-Dominion Bank’s TD Securities unit. “The unfortunate reality is that this uncertainty around rate decisions is not likely to go away any time soon.”

    Futures markets, which had assigned an 80 percent probability to another rate cut March 4 before Poloz spoke, reduced to 29 percent those odds by Friday. Yields on three- month bankers’ acceptances, a benchmark for short-term business loans, have also climbed to 0.84 percent on Feb. 27, the highest in a month, from 0.68 percent four days earlier.

    The yield on benchmark two-year debt rose as high as 0.51 percent on Feb. 26 before trading Monday at 0.48 percent.

    “We must remember that the world changes fast and if it changes again, we have the ability to take out more insurance,” Poloz told reporters after the Jan. 21 rate announcement.

    The last rate meeting to draw as much debate was in April 2009, when just 12 of 25 economists correctly predicted former Governor Mark Carney would cut the key rate to a record low of 0.25 percent, and the remainder expected no change.

    Tuesday’s report on economic growth for the fourth quarter could again shift expectations. The central bank predicts the gross domestic product report will show a 2.5 percent annualized expansion before slowing to a 1.5 percent pace over the first half of 2015. Canada’s current account deficit of C$13.9 billion (C$11.1 billion) in the fourth quarter exceeded economists’ forecasts, a report showed Monday.

    Canada became the first Group of Seven nation Jan. 21 to cut interest rates in response to plummeting oil prices, saying the shock will weigh on everything from inflation to business spending. The decision was predicted by none of the 22 economists in a Bloomberg News survey.

    The changes are abrupt after four years where the policy rate was at 1 percent, and come from a governor who only late last year abandoned explicit so-called forward policy guidance.

    Poloz last week defended his October decision to wean investors off clues from policy makers about future rate moves. He said it allowed investors to focus on economic data “objectively” and that guidance could become a “trap.”

    Poloz’s signals are less explicit than past governors, said Paul-André Pinsonnault, senior fixed income economist at National Bank Financial.

    “The message he was sending was that March was too soon for another rate cut,” Pinsonnault said by phone from Montreal. Poloz “doesn’t want to give too much guidance for the market, he wants to get feedback from the market.”

    Pinsonnault is among 15 economists who say Poloz will keep rates unchanged Wednesday and make just one more cut to 0.5 percent by mid-year. Poloz’s comment last week that the $60 barrel price of Brent crude oil holding close to his January assumption was part of a broader signal the economy wasn’t collapsing, he said.

    Robert Floris is a mortgage broker with Mortgage Architects in Hamilton

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