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Bank of Canada Rate
October 20, 2024
6:24 pm
Winnie
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smayer97 said
...I would not be surprised with a 50 pts drop at the next announcement next Wed.  

My prediction, that on Oct 23 BoC will reduce rate to 3.75% and another reduction to 3.25% will be on Dec 11.
BoC rate will drop 1% before end of the year.

October 20, 2024
6:48 pm
bobwatford
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Winnie said

My prediction, that on Oct 23 BoC will reduce rate to 3.75% and another reduction to 3.25% will be on Dec 11.
BoC rate will drop 1% before end of the year.  

I think the chance of that is about zilch. Like it or not Canada plays follow the leader and where the US Fed funds rate is currently they'd never diverge that much....especially with the U.S. already tampering expectations of accelerated rate cuts. While I know most Canadian banks are expecting a 50 basis point cut coming up even that I think is too 'optimistic'....unless they plan on not cutting in December.

October 20, 2024
7:26 pm
smayer97
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Then you do not follow the markets that closely. Canada does NOT follow the US, though it may appear so at some periods in time. No, each market follows the beat of their of drum; sometimes it is in sync, but sometimes not. You can clearly see that from 2010 to 2015, as an example.

Even lately, BoC changes have not been playing "follow-the-leader".

October 20, 2024
7:27 pm
smayer97
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Winnie said

My prediction, that on Oct 23 BoC will reduce rate to 3.75% and another reduction to 3.25% will be on Dec 11.
BoC rate will drop 1% before end of the year.  

It sure is looking that way at the moment.

October 20, 2024
8:02 pm
bobwatford
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smayer97 said
Then you do not follow the markets that closely. Canada does NOT follow the US, though it may appear so at some periods in time. No, each market follows the beat of their of drum; sometimes it is in sync, but sometimes not. You can clearly see that from 2010 to 2015, as an example.

Even lately, BoC changes have not been playing "follow-the-leader".  

Maybe 'follow-the-leader' was off base and looking into it you're right. While I don't think they'd diverge to that degree for very long it does appear possible for shorter periods. I'd welcome an aggressive cutting cycle as I'm all dividend stocks all the time and it would continue to drive them much higher, but I won't get my hopes up. I still think 1% cut over the next two meetings is dreaming but what do I know.

October 21, 2024
6:56 am
JohnnyCash
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It will be interesting to see if a combined 1% cut has an effect on the CAD?

October 21, 2024
9:08 am
Rail Baron
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JohnnyCash said
It will be interesting to see if a combined 1% cut has an effect on the CAD?  

If I was a snowbird, I would be buying my USD for the winter months now.

October 21, 2024
9:56 am
Dean
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Rail Baron said

If I was a snowbird, I would be buying my USD for the winter months now.  

As of 2day https://ca.finance.yahoo.com/quote/CADUSD%3DX/

    Dean

sf-cool " Live Long, Healthy ... And Prosper! " sf-cool

October 22, 2024
12:34 pm
RetirEd
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Mordko: Moving my RRSP to an RRIF lets me lock in a rate at a time when rates are falling. I had a better rate (5%) in the RRSP, but only until year-end; sacrificing two months at that rate for a longer-term rate guarantee worked out better for me.

The continuing US Fed and BoC rate decline prompted this decision.

RetirEd

October 22, 2024
1:43 pm
mordko
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RetirEd said
Mordko: Moving my RRSP to an RRIF lets me lock in a rate at a time when rates are falling. I had a better rate (5%) in the RRSP, but only until year-end; sacrificing two months at that rate for a longer-term rate guarantee worked out better for me.

The continuing US Fed and BoC rate decline prompted this decision.  

Was that a GIC and you were able to cash it by switching from RRSP to RRIF?

October 22, 2024
2:30 pm
AltaRed
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What I don't understand is why not just transfer existing RRSP holdings to RRIF at the same FI. That is the way I think anyone I know does it.

October 22, 2024
2:53 pm
Rail Baron
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AltaRed said
What I don't understand is why not just transfer existing RRSP holdings to RRIF at the same FI. That is the way I think anyone I know does it.  

If the existing RRSP GICs come due soon, and the chance to lock in longer terms at (relatively) higher rates opens up with an RRSP to RRIF transfer, then there is a narrow window to do this in the coming weeks.

Some institutions will hold GIC rates for 30-45 days when a registered funds transfer is pending. If that rate guarantee can be locked in now, then the RRSP GIC matures within a month or so, and then the funds get transferred into the RRIF with locked in higher GIC rate (higher than what it will be after tomorrow's BoC rate cut works its way through the banking system), this gambit would pay off.

October 22, 2024
3:23 pm
AltaRed
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Okay. I guess RetirEd is dealing with some kind of digital bank/CU does not do straight transfers of assets. in any event, I've/we've gone way off topic for the main purpose of this thread.

October 23, 2024
7:38 am
Alexandre
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The Bank of Canada delivered an oversized interest rate cut of half a percentage point on Wednesday, picking up the pace of easing borrowing costs.

The central bank’s policy rate now stands at 3.75 per cent.

Sadly, but not totally unexpected.

October 23, 2024
8:11 am
kesa
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DYN6004
Screenshot-2024-10-23-at-11.09.50 AM.png

October 23, 2024
3:48 pm
smayer97
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Alexandre said

The Bank of Canada delivered an oversized interest rate cut of half a percentage point on Wednesday, picking up the pace of easing borrowing costs.

The central bank’s policy rate now stands at 3.75 per cent.

Sadly, but not totally unexpected.  

Actually, not at all unexpected... this was foreseeable, as early as Oct 15, but leaning towards that weeks before.

October 24, 2024
1:07 am
RetirEd
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Mordko: Was that a GIC and you were able to cash it by switching from RRSP to RRIF?

AltaRed: What I don't understand is why not just transfer existing RRSP holdings to RRIF at the same FI. That is the way I think anyone I know does it.
[and]
Okay. I guess RetirEd is dealing with some kind of digital bank/CU does not do straight transfers of assets. in any event, I've/we've gone way off topic for the main purpose of this thread.

No, I don't expect everyone to remember everything I said here previously, so:

My little RRSP was at an institution that does not offer RRIFs. It was too small (under $3K) for most other financial institutions to allow me to create a RRIF with it.
(I don't use any "digital banks". I'm the no-online-banking guy.)

It was a 1-year GIC term ending near the end of December. While I could have had 2 months more at 5%, by having it transferred to the new institution, I was then able to then move it to the new institution's GIC RRIF before today's rate drop and keep a slightly lower rate for a full year. The former holding institution does not have RRPS transfer fees. sf-smile

That's why I put this note in this topic.

RetirEd

October 24, 2024
7:50 am
AltaRed
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Thank you... I now recall you saying that about a small amount and your FI not having RRIFs.

October 24, 2024
11:39 am
mechone
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Winnie said

My prediction, that on Oct 23 BoC will reduce rate to 3.75% and another reduction to 3.25% will be on Dec 11.
BoC rate will drop 1% before end of the year.  

I think .25 in Dec or maybe a hold .To go to 1% ,I don't think that will ever happen unless we go into a bad recession. Cheap money is what caused the mess in the first place the bank rate was too low for too long .I would think it will stop around 2.5%

October 26, 2024
3:50 am
smayer97
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Sorry to break it to you but the market has already positioned itself to allow for another 25 pts drop. And since the next decision is not for nearly 7 weeks, there is plenty of time for yet another 25 pts move at the current rate, with no slowing down, at least not yet.

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