Hey Everyone,
The Bank of Canada announced yesterday. Held at 2.25%. Prime stays 4.45%.
That's six in a row.
I wrote an edition back in June about "No cut. Again." I thought about just resending that one and taking the afternoon off.
But as I read the full report and there's something in it worth telling you about. Not the number. The number hasn't moved since last fall. The way they talked about it.
They used the word "appropriate."
The statement says Governing Council judges the current policy rate remains appropriate.
Appropriate is a specific word. It isn't "temporary." It isn't "for now." It's the Bank saying 2.25% is the right rate for the economy we've actually got.
Last month they sounded stuck. Soft economy pushing one way, oil inflation pushing the other, nothing to do but sit there and wait it out. Yesterday they sounded like people who've made up their minds.
Because things got better.
The economy stalled for most of a year and it's moving again. Second quarter growth came in around 2.5%. Consumers held up better than anyone expected. Businesses have found ways around the tariff mess.
Inflation looks worse on the surface than it is. It hit 3.2% in May, which sounds alarming, until you take gasoline out and it's 2.2%, with the core measures sitting near 2%. The price problem is the war and the gas pump. It hasn't leaked into everything else.
So the economy is healing. That's good news, even if it isn't the news anyone waiting on a cut was hoping for.
Rate cuts are medicine. The Bank hands them out when the economy needs help. When it's recovering on its own, they leave it alone. The cut everybody's been holding out for was only ever going to arrive if things got worse.
They also said something about housing worth talking about: activity has been weak, but they think it's stabilizing. That's the Bank of Canada, holding the best data in the country, saying the drop looks finished. They're not saying it's going up. They're saying it stopped going down. Those are different things, and only one of them was true a year ago.
September 2.
That's the next decision. Seven weeks from yesterday.
Last week I told you the dog days end August 11 and we had 33 of them left.
Caught some flak for that, seems not everyone likes being reminded that summer is flying by - noted.
It's 26 now.
Every one of those days goes by before the Bank says another word.
Summer will be over before there's any rate news at all. So if the plan has been to wait and see what happens, nothing happens. Not until September.
Where you sit in this.
If you're in a variable, your rate didn't move. You already knew that.
If you're shopping a fixed rate, remember what I said in June about fixed rates following the bond market instead of the Bank. Canadian bond yields have barely budged. Fixed rates aren't running away from you this month.
If you're renewing this year, and over a million Canadians are, don't sign the letter your lender mailed you. Six holds means the rescue isn't showing up before your renewal date. Build the plan around the rate that exists.
One question.
If you've been waiting for rates to come down, that's six announcements in a row telling you they're not going to.
Hit reply and tell me what you were waiting for, and whether it still holds up now that the next date is September 2.
I'll run your number at today's rate. Takes twenty minutes and I'm not going to try to sell you anything.
Go enjoy the 26 days. Write me first, it takes thirty seconds.
-Andrew
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