As reported by Robin Levinson King for the Toronto Star
, BMO Nesbitt Burns warned that the full-blown turmoil currently battering global markets post-Brexit would apply a strong downward pressure on interest rates.
“In that event, the Fed will remain on ice even longer and Canadian rates will again probe all-time lows, keeping mortgage rates at an extremely low ebb and thus further fanning the flames in the domestic housing market,” BMO chief economist Douglas Porter and senior economist Robert Kavcic said in their joint report a few days before the polls.
Exports would also suffer, as Canada—which exported nearly $16 billion in products to the U.K. last year alone—might no longer enjoy the benefits of the U.K.’s trade deal with the EU.
The U.K.’s withdrawal from the union means that it would have to undergo the arduous and potentially decades-long process of negotiating a new and separate trade agreement with Canada.
Prior to the referendum, Finance Minister Bill Morneau advised Canadian nationals and businesses with investments in the U.K. to start rethinking their plans, as they might experience headwinds due to the global financial upheaval wrought by Brexit.
Economic aftershocks of Brexit will keep Canada mortgage rates at record lows
Brexit could further inflame Canada's already overheated housing—BMO
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The historic “leave” vote in Britain’s Brexit poll last week plunged governments worldwide into a pit of economic and political uncertainty, and the ripples of the referendum will have unmistakable effects on Canada’s real estate and export segments, according to officials and observers.