The week ahead will be an important one for anyone keeping an eye on mortgage rates because the world may look a lot different by close of business this Friday.
There are several important economic data releases scheduled throughout the week, including second quarter GDP results for the U.S. (Wednesday) and Canada (Friday), Canada’s employment report for June (Thursday), the release of the latest U.S. Beige Book (Wednesday) as well as a slew of other U.S. indices updates. But the real action will be in Jackson Hole, Wyoming, where the Federal Reserve Bank of Kansas City is hosting central bankers from around the world at its annual Economic Symposium.
Jackson Hole was where U.S. Federal Reserve Chairman Ben Bernanke outlined the U.S. Fed’s plans for its second round of quantitative easing in 2010 and for Operation Twist in 2011. As such, investors are expecting Chairman Bernanke to hint at significant new stimulus measures when he steps to the podium this Friday at his scheduled post-meeting press conference.
Here are the topics that the experts I read are anticipating he might cover (with my comments on any potential impact on Canadian mortgage rates in italics):
- An extension of the Fed’s guarantee to hold its policy rate at 0% out to 2015.
Bank of Canada (BoC) Governor Mark Carney has long argued that Canadian monetary policy can operate independently of U.S. monetary policy but this is true only within narrowly defined boundaries. An extension of the U.S. Fed’s near-zero percent policy-rate guarantee into 2015 should put to rest any talk of any BoC rate hikes for the foreseeable future.