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Tal holds fast to forecast: Interest rate cuts likely this summer

Real estate market ‘can do extremely well’ when rates do come down

CIBC World Markets deputy chief economist Benjamin Tal believes major global economies are slowing down, but told the audience at the Feb. 27 CBRE Canadian Market Outlook in Toronto he thinks that’s a good thing for the Bank of Canada.

“If I tell you tomorrow that GDP (gross domestic product) in Canada will expand by four per cent and the job market will create 70,000 new jobs, is it good news or bad news?” Tal said during an interview with CBRE president and chief executive officer Jon Ramscar.

“For the Bank of Canada, it’s terrifying. It’s very bad news because it means that they’re losing the fight against inflation.”

But there has also been a dose of bad news for Canada, via negative productivity. This has been a result of the population growing by too much in too short of a time, according to Tal, resulting in a large pool of cheap labour and little motivation for companies to increase productivity. ….[Continue Reading]