Low Interest Rates for Next Several Years!

Central banks signal low rates here to stay
Published in the Financial Post

OTTAWA -- Despite growing confidence that economic growth is in the offing, monetary policy around the world is likely to remain "ultra-accommodative," perhaps until 2011, as doubt remains as to whether or not the growth expected this quarter is sustainable, analysts say.

That is the view emerging following the weekend gathering of the world's leading central bankers in Jackson Hole, Wyo., highlighted by remarks from Ben Bernanke, U.S. Federal Reserve chairman, who warned of the uncertainties ahead, and Jean-Claude Trichet, president of the European Central Bank, who suggested he is in no rush to reverse emergency stimulus measures.

"The key message from Jackson Hole was ... that monetary policy is likely to remain ultra-accommodative for the foreseeable future - at least for the next several years," said Julian Jessop, chief international economist at Capital Economics of London.

"It seems more likely that there will be no increases in interest rates in any of the major economies over the next 12 to 18 months."

Strategists at RBC Capital Markets concurred, adding in a note released Monday: "We continue to believe the economic backdrop will warrant a significant additional period of low rates. Indeed, even at the Jackson Hole conference, there was not even a suggestion that we should be braced for anything other than that outcome."

This outlook applies to Canada as well. Banc of America Securities-Merrill Lynch, as part of global report on monetary policy, said it does not expect the Bank of Canada to begin raising rates until 2011 - well past its pledge to keep the key policy rate, at 0.25%, until June 2010.

Canada has a significant output gap - the difference between potential and real gross domestic product - and the rate at which money is deployed in the economy, or money velocity, has shrunk 15% since late last year even though the central bank has taken its target rate to its lowest possible level, the BofA-Merrill Lynch analysis indicates.

"To compensate, we think the Bank of Canada will probably need to keep rates lower ... to ensure that money creation remains in the double-digit [growth] territory needed to reinflate the economy and close the output gap," the report says.

This outlook is similar to what economists at Laurentian Bank Securities suggested last week. They said a lack of pricing power for firms, a sizeable amount of excess supply and virtually non-existent upward pressure from labour costs means the bulk of policy tightening would not materialize until 2011.

The Bank of Canada signalled in its last economic outlook that it expected economic growth to resume this quarter, marking, technically, the end of a deep but relatively short recession.
It expects growth this quarter of 1.3%, 3% in the final three months of 2009, and the latter again in 2010.

Further boosting the recovery story was data from Japan, Germany and France that indicated economic growth in the second quarter. But there are growing concerns about the sustainability of this emerging recovery. In a note published last week, Olivier Blanchard, chief economist of the International Monetary Fund, warned of a difficult recovery that would take years to unfold as elements of the financial system remain dysfunctional.

Of particular concern in his outlook was the source of demand once governments phased out fiscal stimuli. The worry is that U.S. business investment and household spending would remain weak, and Asian economies would fail to pick up the slack. Still, some leading central bankers warn about leaving interest rates too low too long.

Masaaki Shirakawa, governor at Bank of Japan, told his peers at Jackson Hole that policymakers must avoid economic bubbles fostered by expectations that interest rates will remain low.
"Shirakawa's point about the need to prevent future bubbles is weighing more on minds of central bankers, so maybe they do have to be a little more careful," said David Cohen, director of Asian economic forecasting at Action Economics in Singapore.

More than 80,000 take a free ride on Vancouver's new Canada Line

By Kelly Sinoski , Vancouver Sun August 17, 2009 10:32 PMComments (121)
StoryPhotos ( 11 )Video ( 1 )

More Images » Grady Stanyer, 10, joined thousands of patrons who tried out the Canada Line train that officially opened Aug. 17, 2009.Photograph by: Jenelle Schneider, Vancouver SunMETRO VANCOUVER — Tens of thousands of Metro Vancouver residents waited more than two hours Monday for a free ride on the new $2-billion Canada Line, backing up several stations and clogging pockets of Vancouver’s downtown core.

The lineups started forming hours before the new rapid transit line opened at 1 p.m. and by early afternoon, the crowds snaked around Vancouver’s Waterfront Station, filled up Granville Square and spilled over onto Hastings Street in the downtown, and into the departure lounge at the airport.

By 3 p.m., TransLink was urging passengers to get off at Waterfront, YVR and Richmond-Brighouse stations and wait in line for the return trip to let others have a chance to ride the train.

Five extra trains were added during the evening rush hour — bringing the total to 19 — to help ease the crush, while 11 extra buses were brought in to help reduce the overflow crowds waiting for the 98 B-Line between Vancouver and Richmond as well as the No. 41 and No. 99 B-Line along Broadway.

“We had just about every bus pushed into service,” TransLink spokesman Drew Snider said.

The lines were capped at certain stations at 7 p.m. although TransLink said no passengers would be left stranded.

“It’s a good test for the system in terms of carrying this many people,” TransLink spokesman Ken Hardie said. “The crowds have been big, but they’ve been patient.”

Close to 10,000 people an hour were riding the line and TransLink had counted 80,000 passengers by the time the service stopped at 9 p.m.

The service was free on opening day to celebrate the opening of the transit line linking Vancouver, Richmond and the airport.

Premier Gordon Campbell and Stockwell Day, the federal minister of international trade, cut a ribbon this morning at Vancouver International Airport to officially open the new line. Then they joined other dignitaries and media for a ride into downtown Vancouver.

The opening day drew everyone from seniors to families and disabled people. At least half a dozen wheelchairs and a man with a seeing-eye dog were among those on the first train.

At Waterfront, passengers were unfazed by the long wait for the train and remained in line despite warnings they would have to get off at the airport and wait another two hours to get back on again.

It was the same at Vancouver City Centre, where some trains were terminated to ease the crush at Waterfront. At the airport, crowds stretched from the platform, down the stairs to Level 3 and out onto the departures level.

“We don’t mind waiting,” said Vancouver resident Loro Cadman, as she stood in line at Granville Square. “We’re retired and it’s an historic thing.”

Cadman said the new rapid transit line should reduce the time it takes to make her frequent trips to Steveston. Now, rather than take a bus to Richmond Centre, she can hop on the train.

Several travellers, including Shea Ferguson of Fernie, were among the first to use the new line from the airport to downtown, while Niels Goverse got to the airport using the new line.

“It’s amazing,” Goverse said. “Otherwise I would have to use the 98 B-Line and it’s really packed so this is really good. It’s definitely a better system.”

Shauna Stanyer and her two children travelled from Port Coquitlam for “an adventure” on the new line. The trio had to wait two hours at Waterfront, but Stanyer said the trip was worth it and the family would definitely take the line to the airport whenever they travelled.

Hardie said that overall, the day went fairly smoothly. There were a few glitches, including things falling on the guideway, a cranky elevator and a few problems with the doors.

Several passengers inadvertently hit the emergency stop buttons, which forced the trains to halt on the bridge over the Fraser River or at stations, and required emergency personnel to rush to the scene.

The Canada Line, which is touted as the equivalent of a 10-lane highway, is expected to take 200,000 one-way automobile trips off the road when it reaches its forecast ridership. It will start up again Tuesday with the first train leaving Waterfront at 4:50 a.m. Fares are $3.75 one way.

Hardie expects the passenger load to be lighter Tuesday, which will help TransLink ramp up slowly toward Sept. 7 and the Labour Day rush when several express buses, including those from White Rock and Delta, will no longer go downtown but will be rerouted to Bridgeport Station. The 98 B-Line will also stop running at that time, in an attempt to funnel more people onto the new line.

JULY Stats: Strong spring market carries into summer months

August 5, 2009

VANCOUVER, B.C. – August 5, 2009 – The Greater Vancouver housing market gained further momentum in July with record sales levels and a continued strengthening of home prices.

The Real Estate Board of Greater Vancouver (REBGV) reports that the number of residential property sales in Greater Vancouver totalled 4,114 in July 2009, becoming the highest volume of sales ever recorded within the REBGV for that month, outpacing the 4,023 sales in July 2003, which is the only other year that July sales exceeded the 4,000 mark.

Since the beginning of the year, the MLSLink® Housing Price Index (HPI) benchmark price for all residential properties in Greater Vancouver has increased 9.2 per cent to $528,821 from $484,211. However, home prices compared to July 2008 levels are down 5 per cent.

“Home sales this summer are seasonally higher than normal, which is due in large part to the price correction that has taken place in the last year and low interest rates,” Scott Russell, REBGV president said. “Although wellpriced listings and lower-to mid-range priced properties remain in the highest demand across Greater Vancouver, recent activity from first-time buyers is beginning to boost demand in the “move-up” segment of the market.”

New listings for detached, attached and apartment properties declined in Greater Vancouver, down 17.4 per cent to 5,041 in July 2009 compared to July 2008, when 6,104 new units were listed. At 12,482, the total number of property listings on the Multiple Listing Service® (MLS®) declined 5.8 per cent compared to last month and 34 per cent compared to July 2008.

“It is currently taking, on average, 48 days for a home to sell in the region. Today’s market activity differs by area and property type and it’s important to tap into local housing market expertise to understand why some properties are attracting multiple offers, while others are not moving,” Russell said.

July 2009 home sales declined 3.4 per cent compared to June 2009, but are up 89.2 per cent when measured against the 2,174 sales recorded in July 2008.

Sales of detached properties in July increased 95.2 per cent to 1,614 from the 827 detached sales recorded during the same period in 2008. The HPI benchmark price for detached properties declined 5.5 per cent from July 2008 to $711,702. Since the beginning of the year, the benchmark price for detached properties in Greater Vancouver has increased 9.8 per cent.

Sales of apartment properties in July 2009 increased 76.8 per cent to 1,708, compared to 966 sales in July 2008. The benchmark price of an apartment property declined 4.3 per cent from July 2008 to $365,291. Since the beginning of the year, the benchmark price for apartment properties in Greater Vancouver has increased 9.6 per cent.

Attached property sales in July 2009 are up 107.9 per cent to792, compared with the 381 sales in July 2008. The benchmark price of an attached unit decreased 4.6 per cent between July 2008 and 2009 to $452,085. Since the beginning of the year, the benchmark price for attached properties in Greater Vancouver has increased 6.8 per cent.


Bright spots in Greater Vancouver in July 2009 compared to July 2008:
DETACHED:

Burnaby up 121.7 per cent (153 units sold from 69)

North Vancouver up 53.3 per cent (115 units sold from 75)

Maple Ridge/Pitt Meadows up 60 per cent (160 units sold from 100)

Richmond up 140.2 per cent (221 units sold from 92)

Vancouver East up 66.4 per cent (208 units sold from 125)

Port Coquitlam up 236.4 per cent (74 units sold from 22)

Vancouver West up 104.5 per cent (180 units sold from 88)

South Delta up 203.1 per cent (97 units sold from 32)

West Vancouver up 108.1 per cent (77 units sold from 37)

Sunshine Coast up 60.5 per cent (69 units sold from 43)

ATTACHED:

Burnaby up 123.3 per cent (134 units sold from 60)

Maple Ridge/Pitt Meadows up 77.7 per cent (64 units sold from 36)

North Vancouver up 70 per cent (51 units sold from 30)

Vancouver West up 110 per cent (105 units sold from 50)

Richmond up 152.1 per cent (179 units sold from 71)

Vancouver East up 195.8 per cent (71 units sold from 24)

Port Coquitlam up 117.6 per cent (37 units sold from 17)

Maple Ridge/Pitt Meadows up 77.7 per cent (64 units sold from 36)

Coquitlam up 88.2 per cent (64 units sold from 34)

APARTMENTS:

Burnaby up 72.8 per cent (235 units sold from 136)

North Vancouver up 47.9 per cent (105 units sold from 71)

Richmond up 85.5 per cent (230 units sold from 124)

Vancouver East up 64.2 per cent (179 units sold from 109)

Vancouver West up 94 per cent (584 units sold from 301)

New Westminster up 70.6 per cent (116 units sold from 68)

Coquitlam up 62.3 per cent (86 units sold from 53)

Port Moody/Belcarra up 138.1 per cent (50 units sold from 21)