Bank of Canada Rate | Page 2 | General financial discussion | Discussion forum

mordko said

If bond traders decide future rates then they should know what the forthcoming decision will be with 100% certainty. There shouldn’t have been 20% probability of “no change in rates” priced by the market.

In fact, the price of my bond ETF first dropped immediately before 10am and then jumped in immediate response to the announcement. The announcement must have been worded in such a way that rate change wasn’t obvious until a few minutes into the speech. Clearly the market misjudged what was about to happen and then adjusted once BoC announced the news. You can pinpoint the timing of the rate announcement by looking at yesterday’s bond chart.  

From what I can tell looking at all time frames (minutes to hourly and beyond), though there was a brief reaction by the market, the market had already moved down more before that announcement and reaction, and the reaction was not even enough to reverse the amount of the drop just prior. And as you point out, that reaction was quickly reversed.

I have never said that players in the markets do not react at all to the BoC. What I have been putting forward is that the market leads the direction, and sure enough it maintained that lead.

But taking the lead is not the same thing as deciding future rates. The market's moves tend to be incremental, with occasional reactions, meaning that the market tends to set the trend, based on the same factors that the BoC and other CBs observe. The market is not independent of those same factors.

And sure enough, we have the same response here, based on the data I see.

With all due respect, I will let it be when you let it be. Time for a ceasefire?

There is not one 1yr GIC with 5.5%+ interest left in GIC chart, as of today.

Whoever the man behind the curtain is, I am paying no attention to him. The end result is the same, does not matter who pulls the strings.
I am going to miss high interest rates.

AltaRed said
With all due respect, I will let it be when you let it be. Time for a ceasefire?  

No one is fighting... so not sure why you feel the need to "fire".

It has worked very well for me. This analysis got me to hold off for months then lock in at the top of the rate changes for long term based on this information, well in advance. It is only a tool, a source of information. It is all about learning how to apply the information. So, of course, nothing is guaranteed.

I'm anticipating another .25% drop this morning

everhopeful said
I'm anticipating another .25% drop this morning  

Are you just being ever hopeful?

UkrainianDude said
Why ? Should have kept it at 5% permanently. If inflation persists raise rates more.
This reckless policy will further devalue our loony and put houses out of reach for majority of young Canadians.  

It will also boost house prices for new buyers due to higher demand on no change in supply. The housing situation is a vicious circle that BoC cannot solve. And for those that will be renewing mortgages, it will not decrease debt proportionately. Canadians will simply spend much of the extra cash flow on consumer goods.

I suspect 5% is ultimately too high for a 'neutral' interest rate but there should be no rush to reduce the rate this year. Maybe 4% by the end of 2025 rather than current speculation of as low as 3% by the end of 2025. I don't see this ending well if it goes that way.

0.25% drop was TOTALLY foreseeable, based on the short-term bond markets.

The market has been leading with rates falling since mid Oct 2023. This led to the CB drop in May, and with the markets moving low enough again, this gave room for the CB to lower rate again another 25 pts.

BTW, the US markets are now turning over and leading rates lower again, since about May. I expect the Fed will follow suite next week by a 25 pt drop since the market is giving enough room to do so. Keep an eye out.