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Is the government set to heat up the market?

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Guest | 23 Jan 2014, 07:40 AM Agree 0

In the face of idling home sales, there is growing speculation among economists that the BoC will soon have to fight deflationary trends, in part fueled by idling home sales.
“The inflation right now is very low and it will stay very low in the coming months,” Benoit Duricher, senior economist for Desjardins Group said to the Canadian Press. “So the Bank of Canada should be worried about that.”
That concern was front and centre for industry players expected to parse every word of Wednesday’s BoC rate update. The bank, as expected, held its overnight rate at one per cent, although it lowered its forecast for inflation at the same time suggesting the economy is strengthening.
The bank anticipates that economy grew by 1.8 per cent in 2013, but will expand another 2.5 per cent this year.
That may be overly optimistic, say some analysts, given recent comments by the bank’s governor, Stephen Poloz.
“If the U.S. economy is strengthening as we believe, those will be very welcome kinds of market pressures,” Poloz said on CBC’s the Lang and O’Leary Exchange earlier this month. “But it’ll still be up to us what our monitored policy should be, independently of what’s going on in the U.S. and that will depend on where is inflation relative to where we expect it to be. Right now it’s expected to be too low for too long so that’s where we sit.”Many pundits are pointing to the aggressive measures the federal government has taken to rein in a hot housing market as a main contributor to slower-than-expected inflationary growth, which has been held below the two per cent target for 19 consecutive months.
It remains to be seen if the central bank will lower interest rates in a bid to encourage positive inflation.
  • Rick kropf | 29 Jan 2014, 05:26 PM Agree 0
    The rates have been too low and too many homeowners are in debt up to their ears because they think they can afford the payments. My wife has been consolidating mortgages for clients who have been using their homes as atm machines. When she warns them that home prices are likely to fall and they won't be able to continue to do this they laugh. Its not the recent changes the govt. has made ( should have gone further), its the peoples stupidity that is going to cause an over supply of homes on the market because for too many they are not affordable now and it will only get worse as rates eventually start to rise.
  • Ralphie | 31 Jan 2014, 01:13 AM Agree 0
    Does this "senior economist" ever go to the grocery store or has he tried to purchase a home lately? Too many people are being priced out of buying a home and rent prices are too high especially in Alberta.
  • MadelB | 10 Jun 2014, 04:51 AM Agree 0
    Housing market drops when financial and economic crisis hit the country. I don’t think that we have to blame it to the government. Probably, the government has defect but we cannot totally assume since every sector is responsible for the progress of the country. Fannie Mae, the government mortgage insurance company has published a substantial profit and pledges to not take one more dime in federal resources. Look no further, all of the information and facts you will need is at [url=http://www.matchfinancial.com/payday-mortgage-lenders/]MatchFinancial.com[/url]!
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