The Bank indicated that economic and inflation outlooks are unfolding largely as it expected when it last cut its benchmark interest rate on April 21st, 2009.  At that time, it forecast the Canadian economy would continue contracting until the fourth quarter of 2009.  It also forecast that inflation would to climb back to the two per cent midpoint of its target range between one and three per cent in the third quarter of 2011.

 The Bank also reiterated its pledge to hold interest rates at current levels until the end of the second quarter of 2010, conditional on its inflation outlook. 

In April, the Bank assessed the overall risks to its inflation projection as tilted slightly to the downside.  It reiterated this assessment in its interest rate announcement on June 4th. 

 The Bank acknowledged significant improvements in financial conditions and commodity prices, and modest recoveries for consumer and business.  However, it expressed concern that these positive economic factors could be fully offset if “unprecedentedly rapid rise in the Canadian dollar proves persistent.”

The Bank’s benchmark overnight lending rate was dropped in April to what it described as “the effective lower bound for that rate.”  If it needs to boost economic growth now that interest rates are as low as they can go, the Bank reiterated that it may resort to unconventional means of loosening monetary policy conditions.

 The Bank’s Monetary Policy Report published on April 23rd included information about additional monetary policy tools it may use to further inject liquidity into the financial system in its ongoing attack against the continuing credit crunch. 

When the Bank cut interest rates on June 4th, the advertised five-year conventional mortgage rate stood at 5.45 per cent. This is down 1.2 per cent from one year earlier, and unchanged from where it stood when the Bank made its previous interest rate announcement on April 21st.

The information contained in this report has been prepared by The Canadian Real Estate Association drawn from sources deemed to be reliable, but the accuracy and completeness of the information is not guaranteed. In providing this information, The Canadian Real Estate Association does not assume any responsibility or liability.

Source:  The Canadian Real Estate Association.

The participants in the 2009 Western Preimiers’ Conference in Dawson City, Yukon. From left, Premier Gary Doer of Manitoba, Premier Gordon Campbell of British Columbia, Premier Dennis Fentie of Yukon, Premier Ed Stelmach of Alberta, Premier Brad Wall of Saskatchewan and Premier Floyd Roland of the Northwest Territories.Photograph by: Handout, Government of YukonOne of the keys to Canada’s recovery from the current economic crisis will be to expand trade in Asian markets, rather than focusing solely on the United States, the premiers of this country’s western provinces and territories say.

“Canada often doesn’t think of (itself) as a Pacific country — but we are. And it’s a huge advantage as we move to the 21st century,” B.C. Premier Gordon Campbell said Friday at the closing news conference of the three-day Western Premiers Conference in Dawson City, Yukon.

“The Americans are a critical component of what our economic future is, but actually expanding our economy into Asia will be really important.”

Alberta Premier Ed Stelmach agreed.

“The close proximity to the Asian markets will be the future market for Western Canada. We do a lot of business with the United States, but we can’t depend on just one trading partner,” said Stelmach. “We have a new opportunity to build a new economy — an economy that will lead Canada out of this economic recession.”

Saskatchewan Premier Brad Wall, however, reminded his counterparts that they must continue to recognize the importance of the United States to the Canadian economy.

“This is not just a trading relationship; it is a supply-chain relationship in the continent,” Wall said.

The conference — attended by premiers from Canada’s four western provinces and two of the three territories — wrapped up Friday, also with an agreement to push for an employment-insurance system using “a principled approach” that will make it “fair for all Canadians.”

“When you think . . . of the billions of dollars going into a couple of automobile companies, surely we can find ways and resources that we can support Canada’s workers across the country,” Campbell said.

The overhaul proposed by the western and northern premiers would establish national standards for workers seeking to collect EI benefits.

The premiers contend the number of hours workers must put in before qualifying for benefits should be set according to three national categories that describe where the workers live: urban, rural or remote areas.

The three standards would replace the current requirements of between 420 and 700 hours — depending on which of 58 separate EI regions applicants live in.

“We have to think of our country as one country,” said Campbell said. “I can’t understand a reason why it takes more hours to work in Vancouver than it does in Toronto to be eligible for EI.”

The six premiers emphasized training as a “critical component” of the strategy to create support for workers while they’re unemployed.

“An EI system should . . . emphasize training or re-training to put Canadians to work, so they’re not dependent upon employment insurance,” Yukon Premier Dennis Fentie said.

Campbell said their approach is different than the re-training plan now in place in Ontario. Instead of helping workers left jobless find new careers in other “in-demand” fields, the western premiers hope to train workers in their own industries.

“We are not saying to our forest workers — in British Columbia’s perspective — to ‘Train yourself to another job.’ We actually think the forest industry will be back, because we need it. Wood products are going to be needed, and our agriculture workers are going to be needed,” Campbell said.

“There will be changes to the economy, for sure, but this creates the kind of stability — rather than the downward social spiral — that maintains some stability.”

The premiers also reached an agreement, in principle, in the area of joint purchasing of pharmaceuticals, and agreed to the importance of partnering with aboriginal governments. They also agreed to improve information-sharing and co-ordination among provinces and territories to curb gang activity.

The Western Premiers Conference will be held next year in British Columbia.

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