In both cases, the Canadian dollar is vulnerable.” Alternatively, if the Fed fails to counteract the effects of the trade war on the wider economy, this will negatively impact Canada – and put pressure on Stephen Poloz to cut benchmark rates. If the Federal Reserve engineers a late-nineties style soft landing and bounces back, rate expectations should recover – and the dollar should maintain position relatively to the Canadian dollar. counterparts, and this has dragged the loonie back below levels that prevailed a year ago. “Canadian interest rates have come down in sympathy with their U.S. But with the Fed signalling concern about the global economy (and Donald Trump escalating his trade war against China), investors are downgrading the outlook for countries like Canada. interest rates should lower the dollar’s appeal. Rosenberg shuts down 80-cent loonie call: ‘There’s no catalyst’.Bank of Canada lowers qualifying rate used in mortgage stress tests.A Fed cut could depreciate the loonie's competitiveness: Economist.This will make it even easier for first-time home buyers to qualify for their first home." If mortgage rates do decline further in Canada, it’s possible that the Bank of Canada’s qualifying rate will decrease from its current rate of 5.19 per cent. Those shopping for a new home will appreciate the certainty of knowing that they can secure a mortgage at a relatively low rate compared to years prior. “Low and declining mortgage rates in Canada also reinforce the current stable national housing market. Those with variable rates will only be affected if and when the Bank of Canada makes the decision to cut the key overnight rate. “Canadians can expect fixed rates to maintain their current levels, or possibly decrease, in the foreseeable future. Katherine Judge, economist, CIBC Capital Markets But, with the Fed now lowering rates and the BoC on hold, the Canadian dollar is poised to receive a lift, something that will eventually cause the BoC to become more dovish as the year progresses.” economy is still relatively healthy is a positive for Canada given our dependence on the U.S. for trade. Growth and inflation in Canada are both right where the BoC wants them to be, in contrast to the Fed statement that highlighted low inflation and a slowdown in some cyclical sectors in the U.S. “The Bank of Canada hadn’t shifted its rhetoric as drastically as the Fed did leading up to the Fed cut. Here’s a look at how lower rates south of the border could ripple through our country, according to five experts. Federal Reserve’s decision has a significant impact on Canada and everyday Canadians. It might not seem apparent at first, but the U.S. President Trump wasted no time hurling attacks at the central bank about the “disappointing” size of the cut. While Fed Chair Jerome Powell didn’t commit to further decreases, U.S. Federal Reserve lowered its benchmark interest rate by a quarter point Wednesday, the first cut since the financial crisis.
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