The Bank of Canada meets Wednesday and some are calling for a cut in interest rates to head-off crosswinds in the economy. Bloomberg reports that swaps traders have priced-in a 62 per cent chance of an interest rate cut this week and there is high expectation for at least one cut by April with a second possible during the year. However not everyone is comfortable with the prospect. Expectation of a rate cut is already contributing to the fall in the value of the Canadian dollar and even exporters, who benefit in the short-term from a lower loonie, are concerned that volatile currency rates will erode confidence in the economy. For the housing market there is concern that even lower interest rates will further fuel prices exacerbating affordability issues and ramping up the chance of a correction later on.
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