Pre-Budget – Interest Rates Low, Loonie Loses Value

After meeting with private sector forecasters, Finance Minister Flaherty gave several early clues to what might be contained in the federal budget, expected soon, including increased funding to catch tax cheats and additional economic stimulus to keep people employed.

Canada is in the midst of "a very volatile and risk-filled global environment due to unstable economic environments in Europe and the United States," according to the Finance Department’s post-meeting news release, and it is expected we will be under this cloud throughout 2013. 

"Several studies suggest that changing demographics and evolving economic conditions mean that we need to make sure that people have the right training and skills for jobs today," Minister Flaherty added. 

Employers will also be happy that interest rates will stay low for the foreseeable future.  The Bank of Canada has confirmed the cost of borrowing money at historically low levels. Governor Mark Carney commented on March 5 that the 1 per cent rate "will likely remain appropriate for a period of time," most probably meaning beyond Carney’s departure for Britain in June. This stance continues to take aim at a poor performing Canadian economy that showed unimpressive numbers in the last few months of 2012.  

This news seems to have already contributed to the decline of the loonie. The Canadian dollar closed last Wednesday at 96.95 cents (U.S.), down 0.33 of a cent from Tuesday. However, according to the median of 40 economists surveyed by Bloomberg at the beginning of January, by the end of this year, the Canadian dollar is forecast to grow by at least 1 percent to amount to 98 percent against the U.S. dollar.

The Federal Budget Date is expected to be announced later this month. The following are provincial budget dates. Provisions are summarized as they happen in EverGreen Explanatory Notes. Be sure to sign your friends and colleagues up for EverGreen Explanatory Notes and for Knowledge Bureau Report and receive our Special Budget Report on the evening of the Federal Budget.

Summary 2013 Provincial Budget Dates: