Shenfeld about Economy

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August 25, 2010

Photo by Woodley

There is to be no further increase, in interest rates, by the Bank of Canada after September. This news is what Avery Shenfeld, a CIBC economist, predicts. After seeing an extremely low level of the key lending rate for such a long period of time, 0.25 percent, the bank has raised the rate twice in past two months. In June the rate increased to 0.5 and then a further increase, to 0.75 percent, was seen in July.

However, Shenfeld now forecasts that the central bank will not raise its benchmark rate anytime soon after next month. The main factor influencing this possible happening ought to be the weakness of the US economy, the economist claims. In spite of the fact Canada is doing quite well economically, “it cannot move all the way to normalized rates while the US Federal Reserve is still on hold,” he says.

I would not be surprised if Shenfeld was right, his arguments are pretty logical. Therefore 2010 and perhaps 2011 should be quite good years for buyers. Let’s see whether it will affect the sales anytime soon.