Is the Bank of Canada ready to cut Interest Rates?

Recently, I attended a real estate conference in Toronto where I had the chance to connect with top producing realtors nationwide. We had the opportunity to learn about best practices, technology and economics. Benjamin Tal, Deputy Chief Economist at CIBC, shared a 45-minute overview of the current market. Here's a quick summary in four key points:"

  1. Bad News is Good News:
    • Sometimes, in economics, what seems like bad news can actually be good news. Benjamin Tal suggests that a certain type of news that may appear negative can have positive outcomes for the market.
  2. Bank of Canada's Dilemma:
    • The Bank of Canada faces a challenge. They can't simply reduce interest rates at the moment. When they did so in 2023, the market responded positively, but it led to unexpected consequences. Rates had to be increased twice later in the same year.
  3. Overshooting Interest Rates:
    • According to Tal, the Bank of Canada may have increased interest rates more than necessary, going 0.50 basis points higher than needed. He believes they've reached a point where further hikes are not required.
  4. Future Interest Rate Movements:
    • Looking ahead to Q2 in 2024, Tal predicts the first interest rate decrease by about 0.25. The expectation is that rates might come down by a total of 3%. This implies a corrective measure to balance the previous increases.
 My take:  We are Possibility at the Bottom of the Market
    • There's a chance that we are at the bottom of the market cycle.  The current situation might be the lowest point, indicating a potential turnaround or stabilization in the market next year. 
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