Commodities
'The market is wrong' on rate cut timeline: Ed Devlin
The Bank of Canada decided not to hike interest rates any further this week, and two prominent experts predict economic weakness ahead will prompt aggressive rate cuts that the market is overlooking.
While the central bank has not indicated when it will start cutting rates, the street is projecting rate cuts will begin by late 2024. Devlin Capital founder Ed Devlin told BNN Bloomberg that he’s betting against that sentiment.
“The market’s not always right. I think the market is wrong,” he said.
Devlin said he believes the Bank of Canada will cut rates in the not-so-distant future as he says the monetary policy in both Canada and the U.S. is too tight.
“(Bank of Canada Governor Tiff Macklem) and (U.S. Federal Reserve Chair Jerome Powell) do not want to go down in history as the folks who let the inflation genie out of the bottle … (but) they already are overly restrictive,” he said.
Economist David Rosenberg, founder and president of Rosenberg Research, told BNN Bloomberg that he agrees with Devlin’s assessment.
“They’ve already put the inflation genie back in the bottle,” he said Thursday.
Rosenberg pointed to Canada’s fractionally negative GDP read in the second quarter and signs of no momentum in the third quarter as proof that “a recession has already begun.”
“When you strip out all the nonsense, such as mortgage interest rates in the consumer price index, inflation in Canada is running right at target,” he explained.
“(The Bank of Canada) actually should be thinking about cutting rates, but it’s hubris that’s preventing them from doing that,” he added.
In this economic environment, Rosenberg believes the Bank of Canada will need to act fast.
“Rates are going to be coming down much more quickly and forcefully than the markets (have) priced in right now,” he warned.
While the central bank has not indicated when it will start cutting rates, the street is projecting rate cuts will begin by late 2024. Devlin Capital founder Ed Devlin told BNN Bloomberg that he’s betting against that sentiment.
“The market’s not always right. I think the market is wrong,” he said.
Devlin said he believes the Bank of Canada will cut rates in the not-so-distant future as he says the monetary policy in both Canada and the U.S. is too tight.
“(Bank of Canada Governor Tiff Macklem) and (U.S. Federal Reserve Chair Jerome Powell) do not want to go down in history as the folks who let the inflation genie out of the bottle … (but) they already are overly restrictive,” he said.
Economist David Rosenberg, founder and president of Rosenberg Research, told BNN Bloomberg that he agrees with Devlin’s assessment.
“They’ve already put the inflation genie back in the bottle,” he said Thursday.
Rosenberg pointed to Canada’s fractionally negative GDP read in the second quarter and signs of no momentum in the third quarter as proof that “a recession has already begun.”
“When you strip out all the nonsense, such as mortgage interest rates in the consumer price index, inflation in Canada is running right at target,” he explained.
“(The Bank of Canada) actually should be thinking about cutting rates, but it’s hubris that’s preventing them from doing that,” he added.
In this economic environment, Rosenberg believes the Bank of Canada will need to act fast.
“Rates are going to be coming down much more quickly and forcefully than the markets (have) priced in right now,” he warned.
