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‘Moving in the right direction’: BC economist shares insights into what BoC decisions could spell

Earlier this month, the Bank of Canada announced its first interest rate cut in four years – and more cuts could be on the horizon, according to a Vancouver-based economist.

Ryan Berling, vice president of intelligence and senior economist at rennie.com, recently sat down with NowMedia to share insights on various topics surrounding the rate cut.

Berling believes more rate cuts can be expected, including one in July, but more data on job rates and Canada's GDP is expected before the next announcement, which could impact the decision.

“Prices are rising (on a) …pretty average basis there, so everything is pointing to the need for a cut and we saw one, and we think that there’ll be another one in July,” said Berling.

But the rate cuts won't mean immediate relief for Canadians, as Berling explained it will take time for there to be an impact.

“It’s marginal, but it’s moving in the right direction,” he said when discussing the recent cut of 25 basis points to make the rate 4.75%.

“I think for fixed rate mortgage holders, which is the majority of homeowners or borrowers I should say, you’re still renewing into a higher rate environment, even with rates coming down.”

Berling added that he believes it will take the Bank of Canada around 18 months to get to rates they are comfortable with and probably 200 basis points lower than where they are now.

“There is no flip-the-switch solution here where people are just going to feel better and that’s why I don’t think that this 25 basis point cut is going to ignite housing markets,” said Berling.

The economist added that it is important for the rates to come down meaningfully in the next while to “grease the wheels” of the housing market.

Berling explained that he thinks some developers are looking at the entire situation and hoping the “rate cuts stimulate some demand that already exists within the market.”

Click the above video to watch the discussion and for a deeper dive into other related topics surrounding the economy and housing market.



Send your comments, news tips, typos, letter to the editor, photos and videos to [email protected].




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