FOUR FACTORS THAT POINT TO A CONTINUING STRONG MARKET IN 2020
1. LOWER AND STABLE RATES WILL KEEP PRESSURE ON PRICES
Where Are Interest Rates Going in 2020?
After spending all of 2019 on the sidelines and leaving rates untouched, the Bank of Canada is expected to deliver a long-awaited 25-bps rate cut in 2020.
The BoC’s target overnight rate remained at 1.75% throughout 2019, thanks largely to a strong domestic economy in the face of global headwinds. Meanwhile, more than 40 central banks around the world have cut interest rates in recent months.
“We expect sub–
trend growth will continue through the early stages of 2020, testing the BoC’
s patience,” economists at RBC Economics wrote
in a research note. “We look for a rate cut in Q2, but acknowledge that persistent strength in housing and earlier fiscal stimulus could keep the bank on the sidelines.”
Overnight Index Swap markets are currently pricing in a roughly 30% chance of a rate cut by July, according to Westpac.
(article taken for CREA website)