Quote:
Originally Posted by Hehe
If I were BoC, I will just increase the rate to prevent money flowing outward. Sure it would probably kill the real estate market, but it makes more sense than killing the labour market which many Canadians depend on.
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but a rise in rates will hurt the economy and will cause job losses.
this is the crux of Canada's problems - overinflated asset prices (dangerous to lower rates), yet a lagging economy (usually the answer is to lower rates to spur an economy, a la US economy after 2008), but the biggest factor is the impending US rate hike which usually results in a Cdn rate move to ensure the currencies don't suddenly jump.
A rate decrease would be good as it would make Cdn manufacturing more attractive to the US (cheaper CAD) and would likely result in a better employment picture, though it would be felt through increased prices at the till and potentially the continuation of stupid actions re: overvalued assets.
I would not want to raise rates right now if I were the BoC - would take a brave man or woman... either way Canada turns, there's trouble.