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The Bank of Canada Governor Mark Carney announced today that the Bank’s main focus going forward is to closely monitor the inflation factors.
In a speech to the Hailfax Chamber of Commerce he stated the following main points:
1- monetary policy focus on the inflation and the financial crisis is key
2- inflation targeting of 2%
3-Our labour, product and capital markets are flexible and our bank system is sound
4-Canada has the clearest most powerful monetary policy framework in the world
5-Canada should accelerate to above-potential growth in 2010
The official Bank of Canada announcement is below:
HALIFAX, Jan. 27  – Canadians can be confident that monetary policy will maintain a “relentless” focus on controlling inflation, whether it rises above or drops below the official target range, Bank of Canada Governor Mark Carney said today.
Experience has shown that controlling inflation is the best contribution that monetary policy can make to Canadians’ economic and financial well-being, an issue that is particularly crucial during this period of extraordinary global financial turmoil, the Governor said in a speech to the Halifax Chamber of Commerce.
“In time, the global financial crisis will end, and the global economy will recover, although the speed with which this will happen is subject to a high degree of uncertainty,” the Governor said. “The relentless focus of monetary policy on inflation control is essential in this time of financial crisis and global recession, and remains the best contribution that monetary policy can make to the economic and financial welfare of Canada.”
Governor Carney noted that the Bank’s inflation-targeting framework, established jointly with the Government of Canada, takes a symmetrical approach to controlling inflation. This means that the Bank worries as much when inflation falls below the target of 2 per cent as when it rises above target, he said.
Although the severe global financial crisis has raised concerns about deflation in some countries, the possibility of such a sustained fall in prices is remote in the Canadian economy for several reasons, said Governor Carney. Canada’s labour, product, and capital markets are flexible; its banking system is one of the soundest in the world; and households, businesses, and the public sector have considerable financial flexibility. As well, Canada’s floating exchange rate allows for an independent monetary policy which ensures that “we are in control of our own monetary destiny,” he said.
Moreover, Canada has the clearest, most powerful monetary policy framework in the world. “The advantages of that framework have been demonstrated, with inflation brought down and kept low and stable since the early 1990s, and they are equally relevant in times of disinflationary pressures,” he said. The Governor reiterated the Bank’s economic projection as outlined in its Monetary Policy Report Update published on 22 January.
Although economic activity in Canada is projected to decline this year, it should accelerate to above-potential growth in 2010, supported by policy actions and the past depreciation of the Canadian dollar. On an annual average basis, real GDP is projected to decline by 1.2 per cent in 2009 and to rebound by 3.8 per cent in 2010.

Whenever you choose to enter into a leasing agreement with a company, you want to make sure the company that you choose can fulfill your expectations and needs sufficiently. It is important to consider certain things before signing a lease agreement.

For example, if you are searching for an equipment leasing company, you will want to make sure that the company offers a wide range of equipment from which to choose from. This means that you can choose high end equipment, mid-range equipment or more basic equipment to meet your current needs.

The best thing to do is to ask the equipment leasing company up front what types of brands of equipment they provide and what types of equipment can be leased. In addition, it is important for you to know if, under the lease agreement you secure with the company, you will have the ability to acquire new equipment as needed, or to replace outdated or non-functional equipment.

This is important, and should be explained in the terms of your lease. While equipment leasing is not the only solution for businesses needing equipment, it can be a solution that works well due to the fact that it can keep your business capital available for other needs that may arise.

The Bank of Canada has lowered the overnight lending rate to a new record low as the warns that the economy will shrink in 2009.

In an effort to boost the economy they have reduced the overnight rate by 0.5% to 1%.

By lowering the rate to 1.0%, this now becomes the new low point since the rate was 1.12% back in 1958

There is a great possibility that the Bank of Canada may not been done yet and there is a strong possiblity that in March the rate could be lowered by another half point.

The CBC has stated that “The Canadian economy is expected to contract by 1.2 per cent in 2009, but the bank sees a recovery in 2010, when the economy is projected to expand by 3.8 per cent.

Back in October, the bank projected growth of 0.6 per cent in 2009, and 3.4 per cent in 2010.”

The official Bank of Canada announcement is below.

OTTAWA – The Bank of Canada today announced that it is lowering its target for the overnight rate by one-half of a percentage point to 1 per cent. The operating band for the overnight rate is correspondingly lowered, and the Bank Rate is now 1 1/4 per cent.

The outlook for the global economy has deteriorated since the Bank’s December interest rate announcement, with the intensifying financial crisis spilling over into real economic activity. Heightened uncertainty is undermining business and household confidence worldwide and further eroding domestic demand. Major advanced economies, including Canada’s, are now in recession and emerging-market economies are increasingly affected. Energy prices have fallen as a result of substantially weaker global demand.

Stabilization of the global financial system is a precondition for economic recovery. To that end, governments and central banks are taking bold and concerted policy actions. There are signs that these extraordinary measures are starting to gain traction, although it will take some time for financial conditions to normalize. In addition, considerable monetary and fiscal policy stimulus is being provided worldwide.

Canadian exports are down sharply, and domestic demand is shrinking as a result of declines in real income, household wealth, and consumer and business confidence. Canada’s economy is projected to contract through mid-2009, with real GDP dropping by 1.2 per cent this year on an annual average basis. As policy actions begin to take hold in Canada and globally, and with support from the past depreciation of the Canadian dollar, real GDP is expected to rebound, growing by 3.8 per cent in 2010.

A wider output gap through 2009 and modest decreases in housing prices should cause core CPI inflation to ease, bottoming at 1.1 per cent in the fourth quarter. Total CPI inflation is expected to dip below zero for two quarters in 2009, reflecting year-on-year drops in energy prices. With inflation expectations well-anchored, total and core inflation should return to the 2 per cent target in the first half of 2011 as the economy returns to potential.

Against this background, the Bank today lowered its policy rate by 50 basis points, bringing the cumulative monetary policy easing to 350 basis points since December 2007. Guided by Canada’s inflation-targeting framework, the Bank will continue to monitor carefully economic and financial developments in judging to what extent further monetary stimulus will be required to achieve the 2 per cent target over the medium term. Low, stable, and predictable inflation is the best contribution monetary policy can make to long-term economic growth and financial stability.

Information note:

A full update of the Bank’s outlook for the economy and inflation, including risks to the projection, will be published in the Monetary Policy Report Update on 22 January 2009. The next scheduled date for announcing the overnight rate target is 3 March 2009.

With many lenders and banks lowering their 5 Fixed rate to 4.99%, the question more and more consumers are asking is, “Variable or Fixed Rate what should I do?”
With variable rates at prime plus 1.0% (or 4.50%) and an expected rate decrease in January what is the consumer to do.

If you lock in for a longer-term fixed rate mortgage, you will have the stability of knowing exactly what your payment will be month after month. This mortgage fits the bill for most first-time home buyers.

If you choose a variable rate mortgage, you can benefit from an expect rate drop in January 2009 but are also risk having your mortgage rate go up if the Bank of Canada rate should rise.

In the long run it has been proven that you will be better off with a variable rate mortgage, short term rates are almost always lower than long term rates. If you can handle you mortgage payment sometimes being higher and also lower then this is the mortgage for you.

For those consumers that either want the certainty of a fixed payment month after month or would be worrying what the rate are every day I would choose that fixed rate. No stress, just regular payment. If you want to save some interest payments without the possible movement of the variable mortgage, choose a weekly or bi-weekly payment.

Need more of your questions answered, find yourself a good mortgage agent who will explain all of your options to you at no cost. Some brokers depending on your credit also have some unpublished rate specials. For instance our current variable rate is 3.95% or prime plus .45% and our 5 year rate is 4.79% with a 90 day rate hold, 30 day rate hold is 4.59%.