The bank of Canada, which had such a bright and cheerful prediction last fall, saying that Canada would see an upturn in the economy by spring, now has a much darker view. They have announced that the recession is worse than they anticipated and believe the economy will fall 1.30% this year.They also say we won't see signs of recovery until mid 2011.
In order to ease the pain of the economic chrisis they have lowered the key interest rate to 0.25% which is so close to zero,we may as well be there.In the last year the interest rate has fallen from 4%.This is good news for home buyers, especially if they can get a five year mortgage.However it spells disaster for people with disappearing investments and retirement funds.
If we continue to follow in the footsteps of the United States,I guess the next step is to print more money.I have a vague idea of what advantage that is supposed to give us,but I still have the feeling that it creates a false economy,which is even more fragile than the one that collapsed.At least they are also saying there will be Zero inflation this year And possibly next year.
It would be foolish to wish for a quick recovery now.It can't happen, but I wish the decline would slow to a stop and remain static until we could come up with better strategies.
