BCREA ECONOMICS NOW
Bank of Canada Rate – July 15, 2015
The Bank of Canada announced this morning that it is lowering its target for the overnight rate by 0.25 percentage points to 0.5 per cent. In the press release accompanying the decision, the Bank emphasized that while this additional stimulus is required to help return the economy to full capacity given a contraction of GDP over the first half of the year, vulnerabilities associated with household imbalances could edge higher.
Although core inflation remains close to the Bank’s 2 per cent target, growth in the Canadian economy has stagnated. Today’s rate cut should help to partially offset the negative impacts of low energy prices in the parts of Canada hardest hit by the dramatic decline in oil prices and oil and gas activity while providing further stimulus to regions like British Columbia that are enjoying more robust growth. For housing, the impact in markets like Vancouver or the Fraser Valley that are already experiencing very strong demand may be relatively muted. For other markets that been more negatively affected by low energy prices, including some areas of Northern BC, this may help spur housing demand
Canadian Consumer Price Inflation – July 17, 2015
The Consumer Price Index (CPI) rose 1 per cent in the 12-months to June, a slight acceleration from the 0.9 per cent inflation registered in May. Excluding a 9 per cent decline in energy prices, CPI was up 2.1 per cent year-over-year. Inflation measured by the Bank of Canada’s core CPI index, which excludes fuel, food and other volatile components, continued to trend above the Bank’s 2 per cent target, posting and increase of 2.3 per cent in June. In BC, inflation registered just 0.8 per cent in the twelve months to June.
The British Columbia Real Estate Association (BCREA) is the professional association for more than 18,500 REALTORS® in BC, focusing on provincial issues that impact real estate. Working with the province’s 11 real estate boards, BCREA provides continuing professional education, advocacy, economic research and standard forms to help REALTORS® provide value for their clients.
Copyright British Columbia Real Estate Association. Reprinted with permission. BCREA makes no guarantees as to the accuracy or completeness of this information.