A leading economist believes last year’s prosperous market won’t carry on through 2016.
“I think mortgage brokers should recognize the mortgage market will slow; there is no way we’ll see a repeat of 2015 performance in Toronto and Vancouver,” Dr. Sherry Cooper, chief economist with Dominion Lending Centres, told MortgageBrokerNews.ca. “The government is certainly doing what it can to encourage the slowdown.”
Cooper spoke to MortgageBrokerNews.ca in reaction to Wednesday’s Bank of Canada rate decision.
The central bank maintained its target for the overnight rate at 1/2%.
“Inflation in Canada is evolving broadly as expected. Total CPI inflation remains near the bottom of the Bank’s target range as the disinflationary effects of economic slack and low consumer energy prices are only partially offset by the inflationary impact of the lower Canadian dollar on the prices of imported goods,” the Bank of Canada said at the time. “As all of these factors dissipate, the Bank expects inflation will rise to about 2% by early 2017. Measures of core inflation should remain close to 2%.”
The bank did acknowledge that commodities and oil prices continue to take a hit and negatively impact the economy. It suspects the economy stalled in Q4 2015. It also expects growth to be delayed.
For her part, Cooper believes the move – or, indeed lack thereof – was solid, but that the economic policy report, released alongside the rate decision, was too optimistic.
“I don’t object to keeping the rate as they did. I wouldn’t have objected if they reduced the rate either; I thought it could have gone either way. What I do object to is the tone of the statement and the monetary policy report,” Cooper said. “The government maintains the economy will rebound soon without stimulus and I don’t see that happening.”
Cooper argues the factors that dampened the economy aren’t temporary and that the turmoil in the energy segment will be long-term.