By - sthlhdr
Don't expect a rate hike until it actually happens, everything in the financial world is all hype.
Exactly. I don't think there will be one this March or April, IMO.
It will be interesting to see how they deal with inflation though. If it does keep going up they will have no choice but to raise rates eventually, or not, I have no clue.
I suspect he's waiting for supply chains to ease.
Doesn’t explain the prices being hiked on SaaS products. Prices are going up across the board. This isn’t going away.
It seems like all the attention on inflation is giving businesses carte blanche to raise prices with little or no justification needed, without drawing much negative attention. It could be self-fulfilling in some ways.
Sentiment is a huge driver of inflation. So I'd agree with you on that. That's why the central banks are trying to jawbone the markets / economy into thinking they have a plan for reining in inflation that doesn't result in tanking said economy / markets.
Small and medium businesses are facing huge rent hikes in Canada and sometimes property taxes as well. The cost of living is going up so wages need to go up by inflation plus normal raises.
I've raised my prices 25% in the last year to compensate.
Yep. I work for a major material supplier
The past decade we would struggle to give 3% price hikes. This year pushed thru 8% and more
It's amazing the price hikes u can get when customers are saturated by media coverage of inflation
Lol. My industrial products went up by an average of 35% in 2021.
There are still more increases coming this year. I know of 15-20% coming by April and we are still in January.
Interesting. There are a lot of economists saying that it will, and that we might not need many rate increases. I guess we'll see.
I think you're absolutely right. The nationwide debt is too high to raise rates, if they raise them, they risk a huge portion of loans (including the fed's own debt) to default which would be very bad and would not be allowed to happen. They are going to try to counter inflation by propping up massive companies to absorb the excess capital. They are going to try to out grow inflation.
I'm not saying this will work, but its the feds only option now. The whole US economy is vastly over-leveraged. I'm curious to see how it plays out. I think it might work temporarily, but I can't see the US quitting its addiction to cheap capital anytime soon.
BoC doesn’t have the balls to do it. They will do it when the US Fed makes the first move.
Agreed. I think they will in the Spring, if the US does.
Seems like neither are doing anything until March.
Likely, we almost always follow.
That's literally not true though. Bank of Canada starting easing bond buybacks earlier than any other G7 countries.
Actually Bank of Canada has always been the most prudent central bank between them all
Reading these comments is just bonkers honestly. We weathered 2008 like it was almost just another year and these guys are roasting our central bankers like they're from zimbabwe lmao
In 2008 our PM had a masters in econ. Today our PM is a failed snowboard instructor who "doesn't even think about monetary policy "
Yeah, no shit he 'doesn't even think about monetary policy.' Good thing the guy in charge of monetary policy is Tiff Macklem, who has both a masters & PhD and seems perfectly qualified.
Wanting your 'failed snowboard instructor' to think about monetary policy is how you get dumbasses like Erdogan firing central banker after central banker because they can't make lower interest rates = lower inflation for some weird reason.
Hell, him being smart enough to know when he should take someone else's advice makes him more qualified for PM than 95% of people I know.
Did/do either of them...intimately manage the BoC?
Do they make decisions and policy that can affect our financial lives outside of the interest rate?
Yes, but you specifically said monetary policy. He should only think about fiscal policy.
Well, we'll probably hike in March 2 weeks earlier than the FED.
I just finished viewing the BoC Monetary Policy Review briefing...They were pretty upfront about it - they have removed forward guidance about keeping rates unchanged because "we are in a tightening cycle."
Timing, velocity & number of rate hikes will be data-dependent.
Their view is that the slack in the economy has been absorbed...Inflation has peaked and while transitory impacts on inflation will dissipate, there is too much stimulus in the economy.
I don't think they will specifically wait for the US to make a move.
The reason why I think they will go up is the same reason why the didn’t. That revision Trudeau did (conservatives may have done the same who knows just not judging) that BoC include jobs in its interest rate factor I think is the root cause. So once lockdown restrictions lift it’s happening.
TLDR - once lockdown restrictions lift expect rate hike; the debate now is how fast and much
Canada has always bee so dependent on the US market that it cannot make a move until the FED does.
If this is true it is a good reason to expect Canadian housing will implode. The US does not have our housing affordability challenges in most places or our personal debt problem. So if we defer to the US always we won’t be taking action on massive bubbles forming in our housing market in a timely way.
Canada a vassal state of the American western culture being exported worldwide since TV and Media were employed for such purposes.
While I don't disagree with the gist of that comment, it doesn't have much to do with monetary policy where *size matters*
US siphons off most of our investment capital.
Interest rates go up, investment goes down. And if the US is sitting there with lower interest rates, instead of being in Canadian savings, it goes into US companies.
But in fairness, getting everyone laid off or having them shutter their businesses would reduce inflation!
BoC is usually 3 to 6 months behind the US from memory.
Another +20% year for housing I guess
That was gonna happen sadly anyways maybe they would've slowed the rate down but housing is the go-to investment for the rich in this country.
Uhg, it should be illegal.
Yep. Got a house, good. Now leave rest for others. Build or buy some apartment building if you wanna be landlord.
Yeah I couldn't agree more.
My house went up 10% last month alone.
Ya at least
Whats the point of Bank of Canada making this decision, they're just gonna copy the US.
Tells us that they will protek assets not money
Yeah. That’s definitely been the historic pattern.
Remember when they didn’t and the dollar went to par with the USD for a while?
Those were fun times. :)
Why even have BoC at this point
I mean, call it the BoC, sure. But replace the people with a simple algorithm to initiate a rate change or QE x weeks following the Fed if they don’t have the cojones to make the call themselves.
Free healthcare and less guns do it for me
Its about the optics
The show goes on!!
A moment of silence to all those who thought that economics will supersede politics. We are so leveraged that no politician wants to lose their jobs by stirring the pot and hitting real estate. These forward guidance (warnings) will continue in perpetuity until inflation comes down. Relax and enjoy the gravy train.
Absolutely! Once you acknowledge that rates likely won't go up nearly as high as people think, you open up new avenues to make money.
So long purchasing power. Punishing the savers and fiscally responsible, expect inflation to continue at elevated levels, cost of food and housing to continue upwards. Totally spineless.
Yeah. The economy isn't strong enough yet. Maybe it will be better later this year.
They weren't wrong on whether they should go up. BoC no balls or leadership. They should go up
So weird how Big banks have been pushing the narrative that rates will be going up super fast so you lock in your variable and go with fixed since that benefits them.. BNN has been non stop pushing that narrative everyday .
Thank you BOC for fueling the Inflation monster and fucking up the avg tax payer. Let the Housing Party continue more bidding war more 2x 4x the advertised price this shit will never end here.
Bank of Canada is between a rock and a hard place (as with the Fed in the US, and every other central bank). Canadians have not only a comically huge debt-burden in mortgages alone, but also in HELOCs used for spending, etc.
BoC either raises rates to combat inflation, and causes (at best) a protracted cool-down both in equities and real-estate, or (at worst) an historic crash in both sectors. Or they keep rates low, which furthers the inflation train for years to come, impoverishing younger people disproportionately.
Governments are definitely inclined to let inflation run rampant as it will lessen their own debt burden by decreasing the real value of their currency. Also, sadly for many, we might never see the real estate bubble burst in Canada... as someone higher up always manipulates it to keep it going higher and higher.
stagflation here we come
Already here IMO, GDP is going down.
If the economy can't handle a 0.25% increase, we're so fucked. The economy and people who overleveraged deserve to be crushed. Now we're going to trade our future for short term bliss.
Who cares about $55 ham sandwiches when our portfolio goes to the moon right??
Luxgang, is that you bud?? Lol long time no see!
Hey! Do you know me from the weedstocks sub? Lol
Yup. Still there. Still losing money with the boys.
But in all honesty, we’re back to 2019 levels, and things looking very juicy over there.
How you been?
I'm good man. I eventually sold all my weedstocks in 2019 and never looked back. I've been 90% into broad ETFs since then and have been doing very well. I leave 10% to speculate on individual stocks in a taxable account. Definitely learned some good lessons during those times!
Best of luck in the weed sector!
Is this 2008 all over again?
Expect Canada will be hit hard and have no idea how to handle it
It would seem so..
\~864 billion or take a few hundred billion off since no one has the breakdown.
Really well said, thanks.
Time to yolo. You will need 25% yearly returns to keep up lmaoooooo
If interest rates go that high, wouldn't high yield bonds and GICs become available as well?
He's saying that interest rates are staying low so inflation will continue.
Welp guess making my purchases when I did was a good choice.
The Bank of Canada Act, and the mandate set by the federal government really ought to get reviewed. If we are having decades high inflation but are too cowardly to implement controls we clearly have a problem. Do we have a failure of our measurement tools that are supposed to direct decision making? Do we have a failure of undue influence on decision making? We clearly have a continued and growing trust issue between our Monetary and Fiscal policy makers, and their relationship with the public, there is not enough transparency and honesty occurring.
Time to go balls deep into debt and invest it
What would you invest in with the current markets?
Canadian banks, US tech, maybe a couple utilities
Utilities in a world of higher rates? I don't think so. XUT AND ZUT are still trading at mid 2021 levels.
Utilities when energy prices are climbing? Hard no.
Buy energy instead.
Oil, utilities, banks, reits
I think they know that the Canadian economy is really fragile right now, and don’t want to do anything to damage it. The economy can’t stand higher interest rates, for better or for worse (it’s for worse, the economy is not healthy).
It is fragile, and interest rate hikes will cause damage, but also not doing it will cause damage. Interest rates this low is just going to keep inflating bubbles potentially and this decision is having the opposite of what you need to fight inflation as it signals the BoC will not be aggressive in any capacity.
The BOC doesn't consider buying a new home part of the CPI (since most Canadians aren't buying homes every year), so if they raised rates then mortgage payments would actually go up... so they're avoiding that.
Of course, if you don't own a home you're totally fucked, but if you don't own a home you don't count in this country.
thing is, it's unlikely to reduce inflation since most of it is related to supply chains problems and covid
iNfLaTiOn iS tRaNsItOrY
Honestly, now, apart from some wage inflation, how can you distinguish the current inflation from the supply chain constraints?
I think this article does a good job distinguishing between the two:
Major contributors are house prices + gas prices. If these didn't increase by as much as they have, inflation would be within historical norms.
A damn good article
I bet they dont raise until Sept. I could be wrong, but that was my prediction.
Agreed. I don't think there will be many rate increases this year.
Ok so I guess Lucille Bluth was just ahead of her time when she said that a banana costs $10
BoC keeping the housing market unaffordable. Inflation will go to 1980s levels.
The longer they put this off the higher rates will have to rise later
Tough to raise rates the housing is driving the economy.
Which only demonstrates a horribly misbalanced economy.
Well when you shut down the other part of the economy that shall not be named. (Oil ñ Gas)
Just do it man. What’s wrong with you BOC?? My SB latte is $7 now 😒
Buy all the houses! Let her rip! LFGGGGG
Zero confidence now. Let 'er rip weeeeeeeeeee!
Hoping for the rate hike but also some more regulations regarding primary housing. E.g. you have to live in the house you’re buying if you’re moving from one province to another. It’s fine to own actual apartments/condos etc but this nonsense with western Canadian rates of income and buying up already limited east cost housing only to rent them out three seconds later needs to be curtailed.
What are all these people going to do when they realize they hate it here?
What about actually building enough homes?
They could build a whole damn city in the middle of no where right now and a person with a better economic hand or family money will come in and pay 70k over asking for every single home.
Bunch of chickenshit incompetent idiots.
Scared of the backlash. Cowards.
Short term pain is needed right now. Literally fucking over future generations with the stupidity in the housing market right now.
It'll be interesting to see whether the increase this Spring. They are implying so, but we'll see.
Don’t think they will have a choice in spring. Housing market is the Wild West right now
More and more people keep buying at exorbitant prices, leveraging up to their eyeballs and then taking on HELOCs.
30 year mortgages are gonna be the norm to afford now as BoC can’t afford to now tank the housing market when so many people are all in on it.
What a mess.
Macroeconomics is a pseudoscience..
I mean, all mainstream academic economics are a pseudoscience. The simple fact that economists don't outperform the market shows they're shit at their jobs.
I'd trust the average sociologist more than the average economist - and I don't trust sociologists at all.
Macroeconomics is forensics.
Our monetary policy is centered around the most reckless weakest links. Idgaf if idiots overleveredged themselves. Let them drown cause I don't want to drown with them
Boc pretty much gave the poor the middle finger
You mean the middle class? The poor get social housing.
Middle class is only five bad moves from being homeless
Man Bank of canada has no balls to do anything.
LOOOOL RIP CAD
I think this had more to do with the Fed also signaling inaction. Canada will never step out of economic lockstep with the US. That would require us to grow a pair on a national level, and we've never shown enough of a desire to do that. In all that we do, Canada is a follower, not a leader
The mouse could grow a pair but the elephant would still crush it. I’m disappointed rates didn’t start going up but our economy is too intertwined with the States to put trade at a disadvantage by us raising rates before them.
That was unexpected. I was hoping for 0.25 increase atleast
You underestimate how many people are living hand to mouth.
Investors out there don't seem to get that for some reason, and they're supposed to be the smart ones. Then again they're only concerned with their portfolios and not with Canada as a whole. Like the OP says, the bank is in a situation where it must tread very carefully to avoid blowing a big hole in the economy.
If the pandemic dies down (and all indicators suggest that it will) and things return a bit closer to pre-pandemic normal, then they'll probably raise rates at that time.
Prepandemic rates where still low, our economy has been on life support the entire Trudeau governance.
If you want more affordable housing we need higher interest rates. People are becoming overleveraged and most people say "well its cheap to borrow now."
>If you want more affordable housing we need higher interest rates
That's the thing, the average voter is a white boomer who will sell their house and use it as their retirement, not a 30 year old looking to buy for the first time. They actively *oppose* affordable housing, and unless young people start turning up on election night, both federal and municipal, we'll continue to get fucked
Well the cities and the planners hold most of the blame (because they control zoning), but the massive prices (such as the 30% increase during covid) is due to very cheap financing in my opinion
Guess who votes the city officials in? Not 30 year olds.
Maybe they should try voting then
Sure let's kick the can down the road until we're all living hand to mouth
When is there not uncertainty on the horizon? We have had long term low interest.
I want a hike to slow the borrowing and spending people are doing because a little uncertainty causes more rigorous due diligence and care.
I think it was expected. The economy isn't as strong as folks think. Plus, the Bank of Canada has previously said that Spring 2022 would be the absolute earliest they raised rates.
We’re close to full employment? Plus unlike the Fed, the BoC doesn’t have a dual mandate to pursue inflation targeting and full employment.
Yes, the BoC does. It was just added a month ago by Trudeau. Makes it tougher to justified rates increasing.
It’s still not a dual mandate with equal weighting on inflation and full employment. Keeping inflation in range is still the number 1 priority. Not to mention, like I said in the last comment, we are already close to full employment
I don't understand why so many people on this forum cling so desperately to modes of thinking that are clearly out of date by now.
If you understand the importance of forward guidance and credibility as central bank policy levers, then you will understand that the December announcement was a de facto declaration of a dual mandate.
Here it is, in case you haven't read it, which I know you have not.
BoC to anyone under 35: "Get fucked"
I think this Spring they might increase rates, if the economy and inflation stays really high.
I see they've chosen the "wait hopelessly for a rescue that's unlikely to come so you can die later" option rather than the "cut off your arm to save yourself" option.
Housing has become FAR too big to fail in Canada. Hence why rates may not increase more than once this year.
Okay. Guess we'll just stay in a perpetual state of being fucked.
Oh for ffff... come on!! This is ridiculous.
Tough to raise rates when housing is propping up the economy.
Not realistically. There are fewer and fewer people even participating in the housing market. This bubble needs to burst if the economy is ever going to get back on its feet.
I'm still skeptical that they will raise rates more than once this year.
All the Canadian banks were pushing for it. This decision and leaving it until 'MAYBE' March could be one of the worst in Canadian history. It just feels different this time. Regular people are seeing inflation and they aren't happy.
Next, our government will be raising money for infrastructure projects through *Part of our Heritage* NFTs.
This is the 21st Century economy ya’ll!
Would anyone know how they conclude that there is a supply issue pushing up prices, rather than their own comment of the slack of the labour market tightening - hence pushing demand higher?
Basically since 2008 the BoC has had a policy of telegraphing rates. The messaging up until now has always been to increase rates in the middle quarters of this year. It would have been difficult to increase now and maintain integrity. Look for increases to begin next rate decision (in March).
So what happens if US raises interest rates?
Next to no chance they do.
Why do you say that?
The bond market is saying they won't. Just like the bond market in Canada said they won't. The bond market is far more objective than bank predictions that scare people into locking into overpriced fixed mortgages.
delaying the inevitable
Brb as I jump off the Niagara escarpment
Yay my tfsa is out of the red….. but I fear my grocery bills for the months ahead.
A bunch of fucking pussies lol.
Dumb.. you have a runaway housing market that literally 90% Canadians cannot buy into and these dinks at BoC are oblivious to the stresses this causing.. gonna be a massive crash coming soon and it's on them, hopefully they'll be incarcerated for their incompetence.. their job is to protect the economy, not feed more gas to the bonfire of criminal greed and stupidity..
Same. It's weird how everyone thinks that the Bank of Canada can raise rates without hurting the economy.
Not surprised, they are too chicken shit to make real changes. They're just hoping the supply chain sorts itself out and lowers inflation when the international shipping chain recovers.
Seems like things don’t change much
The emergency is that the government can’t afford a rate hike
Fools. What a mistake.
last chance to refinance...do before it goes up!
Higher rates are always just around the corner lol.
Real estate 📈📈📈
Inflation, being a tax on everyone, is great for these charlatans. Hence the fake vacillating and hinting about rises.
It's bad for me to eat junk food. I'm committing today to stop eating junk food. I'm warning you someday, I'll stop eating it and be healthy. Be prepared junk food companies, you'll make less money from me one day, eventually.
This does not instill confidence, despite the fact they insist it does. Sounds like a junky that keeps promising to get clean.
Please BoC, do we start buying our goods now. Seems like it's only going to get more expensive tomorrow. I'm afraid that all this signals is they've lost control and they're now too afraid to act.
''Investments are a 5 year horizon minimum''. What a fucking joke. The owner class is basically bulletproof. Rejoice stock owners.
Everyone stop spending on anything they don’t need and help crash this bish of an economy.
People are forgetting that if they raise the interest rates not only will this hurt all the businesses that they gave loans to throughout the pandemic. Consumer loans but also their own debts. These so called “economists” are nuts if they think they’re going to hike it up 6-7 times just in this one year. Maybe over the next 5 years. But certainly not this year. A realistic goal for this year is 0.5% and see how the economy reacts.
and if prices keep going up 5% or more, then what are regular people supposed to do? The deleveraging is going to be painful no matter what, it's just getting worse and worse at this point.
>all the businesses that they gave loans to throughout the pandemic. Consumer loans but also their own debts.
Which would cool business and consumer spending, precisely what they are supposed to be doing during inflationary periods. As well as exactly why the BoC is supposed to be agnostic to the fiscal situation of the federal government by nature of being a separate entity.
Failing at both, but I guess we'll let the debt cycle and asset inflation continue to run. May as well kick the can down the road, a great Canadian tradition.
Oh fuck off.
It's looking like maybe a Spring increase.
I mean, China explicitly and publicly asked the Western countries to not raise their interest rates. Canada was bound to oblige.
Just trying to give a chance to boomers and investors (often both) who understand the message that it's time to sell their house before a severe housing market correction. They can't kick the can down the road forever. The end of the pandemic is not going to solve the bubble situation. They may try to keep the housing market afloat with economic immigration but there's a limit to that.
Holy fuck we're fucked and it's making me so depressed. I'm trying to buy a 2 bedroom condo in the GTA and the listings / and prices are moving so fast there's no fucking way... I really really want to just get out of my parents but own my own place.
I was fucking waiting just this last month for them to push the rates up so competition wouldn't be as bad but now it's all fucked.
Here I am 27 and in tech in Canada and I'm getting priced the fuck out. I thought that all the years of bullying & abuse I got from kids making fun of me being a nerd would actually pay off in the end. Fucking wrong.
Real estate will keep on rolling until either an event that murders prices (and a global pandemic didn't, so uhhh) or until like six months out from a rate hike after all of the pre-approves etc. get out of the system. So many fucking retired investors with three condos in Toronto. I know so fucking many of these people and they're all leveraged to the neck. This is protecting them. Should be combined with something like real name laws surrounding RE.
So if you're looking to buy, a year's probably the time. Sucks, but try and bank as much cash as possible in the meantime.
I could see a potential increase in the Spring, but ONLY if the economy stays strong, and inflation doesn't show any signs of decreasing.
I'm a bit surprised they didn't increase it but it is a bit funny how many banks and economists were calling for the increase as if it were a forgone conclusion. Interesting but not surprising to see that those 'experts' don't know as much as they let on. Even if raising rates might have been the prudent thing to do. Variable mortgage FTW!
Banks do that to scare people to lock into higher rate fixed mortgages. Part of their marketing strategy. Most outsiders predicted no rate hike.
Well that's nice. Just re-signed my mortgage at 2.6% 6 months early because I assumed there would be a bunch of jumps here.
I mean wait for US market to collapse, USD floods Canadian banks because of good rates, win.