Les Whittington Ottawa Bureau

OTTAWA— The Bank of Canada acknowledged Canada’s economic recovery by raising its trend-setting interest rate to 0.75 per cent, but warned of a weak global economic picture.

While saying that consumer and government spending continue to drive the Canadian recovery, Bank Governor Mark Carney admitted that the rebound from the recession will unfold more slowly than the central bank had been predicting.

Facing an “uneven global recovery,” Carney signaled that the Bank will have to see improvements in the economic situation before it raises interest rates in Canada again.

“Given the considerable uncertainty surrounding the outlook, any further reduction of monetary stimulus would have to be weighed carefully against domestic and global economic developments,” Carney said in a statement accompanying the rate announcement.

The hike continues the Bank’s movement away from the rock-bottom interest-rate policy Carney adopted during the depth of the recession. After keeping the rate at 0.25 per cent for nearly a year to bolster the struggling economy, the Bank raised its overnight rate to 0.50 per cent on June 1.

But while the Canadian economy showed strong growth in the first months of this year, the current outlook is decidedly mixed, according to the central bank.

“The global economic recovery is proceeding but is not yet self-sustaining,” Carney said. In the U.S., private demand is picking up but remains uneven, and the European debt crisis, while staunched by government action, remains a question mark for the rest of the world.

“While the policy response to the European sovereign debt crisis has reduced the risk of an adverse outcome and increased the prospect of sustainable long term growth, it is expected to slow the global recovery,” the Bank’s statement said.

In Canada, the recovery will continue but at a slower place than the Bank predicted in April. Growth will hit 3.5 per cent in 2010, 2.9 per cent in 2011, and 2.2 per cent in 2012. It will be late 2011 before the economy regains full steam.

“This revision reflects a slightly weaker profile for global economic growth and more modest consumption growth in Canada.”

The Bank said housing activity is slowing sharply and, while job-creation has picked up, the needed rebound in business investment has yet to materialize.

“While employment growth has resumed, business investment appears to be held back by global uncertainties and has yet to recover from its sharp contraction during the recession,” Carney said.

The next rate setting is Sept. 8.

OTTAWA— The Bank of Canada acknowledged Canada’s economic recovery by raising its trend-setting interest rate to 0.75 per cent, but warned of a weak global economic picture.

While saying that consumer and government spending continue to drive the Canadian recovery, Bank Governor Mark Carney admitted that the rebound from the recession will unfold more slowly than the central bank had been predicting.

Facing an “uneven global recovery,” Carney signaled that the Bank will have to see improvements in the economic situation before it raises interest rates in Canada again.

“Given the considerable uncertainty surrounding the outlook, any further reduction of monetary stimulus would have to be weighed carefully against domestic and global economic developments,” Carney said in a statement accompanying the rate announcement.

The hike continues the Bank’s movement away from the rock-bottom interest-rate policy Carney adopted during the depth of the recession. After keeping the rate at 0.25 per cent for nearly a year to bolster the struggling economy, the Bank raised its overnight rate to 0.50 per cent on June 1.

But while the Canadian economy showed strong growth in the first months of this year, the current outlook is decidedly mixed, according to the central bank.

“The global economic recovery is proceeding but is not yet self-sustaining,” Carney said. In the U.S., private demand is picking up but remains uneven, and the European debt crisis, while staunched by government action, remains a question mark for the rest of the world.

“While the policy response to the European sovereign debt crisis has reduced the risk of an adverse outcome and increased the prospect of sustainable long term growth, it is expected to slow the global recovery,” the Bank’s statement said.

In Canada, the recovery will continue but at a slower place than the Bank predicted in April. Growth will hit 3.5 per cent in 2010, 2.9 per cent in 2011, and 2.2 per cent in 2012. It will be late 2011 before the economy regains full steam.

“This revision reflects a slightly weaker profile for global economic growth and more modest consumption growth in Canada.”

The Bank said housing activity is slowing sharply and, while job-creation has picked up, the needed rebound in business investment has yet to materialize.

“While employment growth has resumed, business investment appears to be held back by global uncertainties and has yet to recover from its sharp contraction during the recession,” Carney said.

The next rate setting is Sept. 8.

THis article found at http://www.thestar.com/article/837806–central-bank-hikes-key-interest-rate-to-0-75-per-cent

B.C. is homebuyers’ territory
Active listings sit at the highest level since March 2009, economist says
By Derrick Penner, Vancouver Sun July 16, 2010

When Maple Ridge’s Monika Novosadova went house hunting this spring, she faced an embarrassment of options, looking at 28 homes before putting an offer down on a three-bedroom, single-family home at the end of June.

And it was a shrewd offer since she faced a buyer’s market, like much of British Columbia in June, with rising inventories and declining sales putting home-hunters more in control.

“I felt I had cards in my hand because it was a buyer’s market,” Novosadova said in an interview. “And I felt fairly confident the price could be negotiated down.”

So the single mother wound up getting the house in a “perfect family neighbourhood” for $421,000, not the $429,900 it listed for.

Now she’s excitedly looking forward to moving into the home in September with her 10-year-old daughter. Her realtor Ron Antalek said Novosadova’s experience is typical.

“There’s not the necessity of multiple offers and competing bids,” Antalek said. “People are able to shop. They have time to compare.”

Across B.C. in June, realtors recorded 7,722 sales through the realtor-controlled Multiple Listing Service. That was down 22.5 per cent from the same month in 2009, the period when the biggest markets were just heating up again.

Active listings in inventory climbed almost 21 per cent to hit 59,232 units in June, which equalled a 9.3-month supply based on the pace of sales, said Cameron Muir, the B.C. Real Estate Association’s chief economist.

Muir said the key influences in June were simply an extension of the ones that have dampened demand since they took hold in April: tougher qualifying rules for some mortgages, particularly for first-time buyers and those seeking secondary suites, and a shift in long-term mortgage rates.

Plus, Muir added, the hot buying activity at the end of 2009 lured in many buyers who might have waited until now to purchase, which further reduces demand.

“I don’t know if there’s anything surprising about it, but we’ve seen a transition, in Vancouver in particular, from a seller’s market at the start of the year to a buyer’s market in the summer,” Muir said.

The experience, however, differs depending on which region homebuyers are looking in.

Victoria saw the biggest decline in June sales, down almost 36 per cent from June 2009, but it was closely followed by Metro Vancouver, where sales were down almost 30 per cent, and the region around Kelowna and Vernon, where sales were down almost 27 per cent.

As for whether B.C.’s markets are simply shifting balance or heading into a deeper correction, Muir believes buying activity is likely to increase again in the fall, but not enough to put dramatic pressure on prices.

The average B.C. home price, across all home types, hit $499,908 in June, up 8.2 per cent from the same month a year ago, but slightly off the average of $504,281 over the first six months of 2010.

Muir said home inventory levels sit at the highest they’ve been since March 2009. He said they are “at or near the peak as to where they’re going to go.”

Cameron McNeill, a new-project marketer with MAC Marketing Solutions, said that while sales have slowed, the decline is nothing like the collapse of sales that was experienced in late 2008 and early 2009.

“We’ve got 15, 17 projects open [for sales] and we’re doing deals on all of them,” Mc-Neill said.

depenner@vancouversun.com

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