More good news for the Vancouver Property Market! (Canadian interest rates should stay steady, OECD says)

Hi All,

For all those who may have been reading about a "bubble" in the market, here is more evidence that this is not the case. We are seeing a soft landing with none of the calamities forseen by those preaching doom in the blogoshpere (Vanhousing Blog is a perfect example).

So to all the Cassandras, here is one more dose of reality and to all those who are interested in pertinent and useful information from an active market participant, keep reading!

TAVIA GRANT

Globe and Mail Update

Canadian interest rates shouldn't budge unless wage pressures flare up, the Organization for Economic Co-operation and Development said Tuesday.

It noted that economic activity has eased recently because of higher interest rates, terms-of-trade losses and weaker exports. Growth is expected to benefit from some pick-up in foreign markets, though domestic demand will likely slow.

“In the context of on-target inflation and a modest pick up in activity, the Bank of Canada should keep its policy rate constant so long as no nation-wide labour market pressures come into view,” the OECD said in its semi-annual economic outlook.

The Bank of Canada's key lending rate has remained unchanged at 4.25 per cent since May.

The OECD predicted the Canadian economy will growth 2.8 per cent this year and 2.7 per cent next. It's expected to quicken to 3.1 per cent in 2008. Domestic demand is seen easing over the next few years.

In the meantime, inflation pressures will likely remain “limited,” because of lower energy prices and only moderate wage increases.

The OECD also cut next year's global growth forecast for all 30 of its industrialized member countries to 2.5 per cent -- the lowest rate since 2003 -- from its previous forecast of 2.9 per cent..

“Rather than a major slowdown, what the world economy may be facing is a rebalancing of growth across OECD regions,” the report said.

It sees an unwinding of “cyclical differences,” with activity cooling in the U.S. and Japan, and gathering speed in Europe. Any slowdown should remain “well-contained,” it added.