Guest Post by Dave Larock
The Bank also issued its latest policy statement, which is basically an assessment of how events both at home and abroad are influencing its monetary-policy direction. Here are the highlights from the BoC’s latest policy statement, with my accompanying comments:
- Overall global economic growth is evolving as the BoC anticipated in its October Monetary Policy Report (MPR). The U.S. economy “continues to grow at a solid pace”, and while the Bank noted that “private domestic demand has proven slightly less robust than expected”, I don’t think this is too concerning because Americans are saving more instead of spending these days. To wit, the U.S. personal saving rate rose steadily from 4.80% in May of this year to 5.60% by October, which is the highest it has been in nearly three years.
- The Bank notes that “ongoing terms-of-trade adjustments and shifting growth prospects across different regions are contributing to exchange rates movements”, and that against this backdrop “policy divergence is expected to remain a prominent theme”. In other words, countries are experiencing very different economic growth trajectories which are leading to exchange-rate swings and are impacting the relative demand for imports and exports. These diverging economic circumstances require the central banks to undertake very different monetary-policy actions, and the BoC calls this a “prominent theme” that will continue to have a significant impact on global economic growth going forward.
David Larock is an independent full-time mortgage planner and industry insider. Visit his blog for many more interesting articles and some great mortgage advice.
Marg Scheben-Edey is a Broker with RE/MAX four seasons realty limited, Brokerage in beautiful Collingwood, ON. With three decades of experience, Marg is a leader in the local real estate marketplace and is ready to help guide both Buyers and Sellers in achieving their real estate goals. Email Marg