Will Canada see 'surprise' interest rate cuts in the near future?

As many producers are aware, there are a plethora of things going on in the global economic sphere… and growing concerns are rising. But how do we understand what everything means? How do we unpack it all?

Farm Credit Canada’s chief economist J.P. Gervais joined RealAg Radio host Shaun Haney to give a little more direction and understanding of the current economic issues surrounding agriculture.

“Most of what is going on in terms of rate cuts and central bank actions — we got a surprise rate cut in New Zealand for example, 50 basis points, Thailand, India — so central banks are really getting a little bit of cold feet in terms of what they are seeing between the U.S. and China, and for good reasons,” Gervais explains.

“When you bring in the trade war as well as the currency issues that have now been bubbling up, for sure it raises alarms in terms of what will the global economy look like until the end of the year.”

With numerous countries going through some difficult times and facing both some ups and downs, Gervais notes that a critical point to understanding the global economy is to look further into the long term not just at one month at a time.

“You got to be careful to put too much weight on one monthly data point,” Gervais emphasizes. “Especially once you know that those monthly data points are going to be revised later on. So it’s best to wait and see.”

With talks of more interest rate cuts and the U.S. and more surprise cuts as of recently, it begs the question — what is going to happen in Canada?

“I’m in a tough spot, because I’ve always hated to bet against markets. Now I still think that we are going to be able to wait off with a rate cut. When it comes to what happened last week in terms of some central banks actually going ahead and ‘surprising’ the markets to some extent and cutting rates, I can actually see the Bank of Canada taking this route shortly,” Gervais adds.

Listen to the conversation between Shaun Haney and J.P. Gervais, below:

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