Bank of Canada Reduces Interest Rates

Last week, the Bank of Canada (BoC) announced that it is lowering its target for the overnight rate by one-quarter of one percentage point to 1/2 per cent. The Bank Rate is correspondingly 3/4 per cent and the deposit rate is 1/4 per cent. This follows an announcement made in January of this year that the BoC became the first central bank in the Group of Seven to cut interest rates in response to plummeting oil prices. So far in 2015, Canada’s economic outlook has been murky. The country’s economic growth (real GDP) has been marked down drastically since the BoC’s April projections in large part due to the faltering energy sector. Some of our thought leaders on Economics & Finance weigh in on the issue:

Kevin O’Leary | Entrepreneur & Shark Tank Judge

Kevin is one of the worlds most well-known venture investors. He leads a group of financial companies and just finished up season 6 of ABC’s hit show Shark Tank (season 7 will hit screens in the Fall). Known for being blunt, colourful, with matter-of-fact commentary on business issues,  ‘Mr. Wonderful’  is truely one-of-a-kind in the world of business commentary. Kevin was on BNN’s Top Line where he argued that rate cut will only add to Canada’s woes by damaging investor confidence.

He also stopped by Canada AM to discuss what it means for Canadians and whether or not it was the right move:

Michael Campbell | Business Columnist & Host of Money Talks

Michael is best known as the host of Canada’s top rated business show Money Talks, heard across the country on the CORUS radio network. He discussed the cut on his, stating it’s a major wakeup call:

He also discussed what the cut in interest means for Canada’s economy with Global News. Without a doubt he noted Canada was in a recession, but he doesn’t see the population racking up debt, as the quarter percent wasn’t the key element holding businesses or individuals back from spending. One of his main concerns is the impact it would have on seniors, potentially causing them to work longer. View the full interview below:

Don Drummond | Former Senior VP & Chief Economist – TD Bank

During almost 23 years at Finance, Don Drummond held a series of progressively more senior positions in the areas of economic analysis, forecasting, fiscal and tax policy. In an interview with CBC he criticised under-performance the BoC has projected, with the country not-set to reach they levels they’d like to see until 2017.  Earlier in the week, Don was interviewed by CBC on Finance Minister Joe Oliver’s unexpected nod to government stimulus spending:

“The only agents in the economy responding to lower interest rates are consumers and house buyers, and they’re just racking up more debt.”

You can read the full interview here, or check out a clip on the BoC rate cut below:

Sherry Cooper | Chief Economist, Dominion Lending Centres

Sherry Cooper is an award-winning economist who recently made a return to her roots on Bay Street with Dominon Lending Centres. She was formerly the E-VP and Chief Economist of BMO Financial Group. Over her career Sherry has been responsible for industry-risk and country-risk analysis for the Risk Committees of the bank.

Sherry’s been vocal in her concern over the impact of low oil prices on the economy and was raising that very concern in a blog post last week, in which she stated:

“Much-needed infrastructure spending should be increased as a proactive counter-cyclical measure that would be far more effective than a rate cut from historically low levels.”

Sherry was on BNN where she argued rate cut “won’t do much good,” given the external factors that could still affect Canada’s economy.

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