Bank of Canada likely to cut rates for protection
As a way of safeguarding the country from the likely recession in the US, it is likely that the Bank of Canada will cut key interest rates today when it meets.
Since the Canadian economy is so dependent on the US economy, and vice versa, the Bank of Canada is likely to cut its key benchmark lending rate today in the hopes of averting a recession such as that which is growing in the US.
A rate cut today, which is likely according to most economists, means that rates would be cut two months in a row.
The US is Canada's largest trading partner.
The Bank of Canada will release information about the rate cut, should it be decided on by 9 am New York Time today. It is likely to reduce the rate by a quarter of a percentage point, then.
Currently, Canada's overall property market has been improving, seeing good growth. The fear is that a recession in the US would trigger a likely recession in Canada since a drop in spending in the US would target reduced demand for Canadian products.
Canada has seen doubt digit increases in the resale property market throughout the last 12 months, with 13 out of its 24 markets seeing such growth. Economists still believe property growth here is likely, especially if recession is avoided through such interest rate cuts.
In the last five recessions that hit the US, Canada's economy did see some drop for at least a quarter. Staving off a recession now will likely help Canada to see continued growth in the largest period of growth since World War II.