0715poloz2.jpg

Where investors should look for opportunities after the Bank of Canada’s rate cut

Bank of Canada Governor Stephen Poloz steps onto the stage at the National Press Theatre for a news conference in Ottawa.

The Bank of Canada’s 25-basis-point rate cut last week to 0.5 percent certainly made a few investors grumble.

Will the Bank of Canada have to start looking at QE? Debate grows as data appears to confirm recession


After last week’s rate cut and more weak data today, there\’s a new debate brewing in Canadian economic circles whether the Bank will walk into the realm of unconventional measures

For one thing, the cut isn’t great news for investors who rely on income from safer investments such as bank-issued guaranteed investment certificates.

It also worries those wondering what\’s going to happen to already overheated housing markets in Vancouver and Toronto since the banks quickly responded in kind by reduction of their prime lending rates.

That said, it\’s possible to choose to view the glass to become 50 basis points empty or 50 basis points full.

To help to keep things in perspective, Canada\’s overnight rate is still double the U.S. Federal Reserve\’s policy rate despite two cuts this year.

By taking a realist approach, there is scope in this low rate environment, instead of simply complaining about it.

For example, I had been recently in Kelowna, B.C., on holidays and really noticed how it was booming, that was surprising given this is a hot spot for Alberta vacationers still reeling from low energy prices.

After talking to a number of well-informed locals, I soon discovered the reason for the strong local economy: property.

Related