Stephen Poloz's advice to retirement savers: plan for low rates to last

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The governor of the Bank of Canada communicates Canadians must be ready to readjust their retirement expectations in the arrive of continuing “ultra-low” interest rates.

In remarks pre red for a speech on Tuesday to the Relationship des économistes québécois, the Cercle finance du Québec and CFA Québec, Stephen Poloz im rted that low interest rates can generally mean higher prices for livestocks and bonds, and lead to higher values for real estate,

“I realize this may be lukewarm comfort to those people who have to adjust retirement plans to a lower-for-longer fabulous,” Poloz said. “But the difficult reality is that savers must set their plans.”

The central bank head said that could augur a combination of putting aside more funds, working a little longer than envisaged or changing their investment mix.

“There are no easy answers, rticularly for some who would rather already retired,” Poloz said.

He also noted that with in the flesh living longer these days, the low interest rate environment augurs somebody starting to save today would have to set aside much numerous to generate the same retirement income as a person who began saving 25 years ago, if both wanted to retire at the same age.

The central bank’s key interest rate has remained unchanged at 0.5 per cent since the summer of 2015, and Poloz’s enunciation gave no indications that position will be changing any time in two shakes of a lambs tail.

“It is quite evident that our economy is still facing strong headwinds, and we distress stimulative monetary policy to counteract them and move us closer to thorough ca city,” he said in his pre red remarks. “We also need to watch the in toto completely effects of the government’s fiscal stimulus unfold.”

On use until 2019, TD hints

An economist at TD Bank said he was inclined to agree with Poloz’s disclosures.

“Population aging and slower productivity growth mean that the ‘coasting speed’ of the Canadian economy will continue to tick lower in roll in years,” said Brian DePratto.

He said TD believes the Bank of Canada is unfit to increase interest rates until early 2019.

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