The Bank of Canada will probably raise interest rates again in October as inflation continues to add to the stress of the average household in Canada.

The interest rate hikes do take time, but we are hopeful that in the coming months and well into 2023, we will see the higher interest rates begin to bring inflation down.

On the upside GIC rates have increased.

As the rates increase it affects many households and sectors of the economy differently and at different speeds.

We can look at the rapidly cooling housing market where the higher rates have made a huge impact on the cost of borrowing for a mortgage.

According to the Bank of Canada by front loading rate increases now, they are trying to avoid the need for even higher interest rates and a more pronounced slowing of the economy down the road.

There are 3 areas of interest they will be watching:

·      Higher interest rates: Are the higher interest rates working to slow demand? When consumer spending moderates and labour demand eases, pressure on prices should decline.

·      Global supply disruptions: Are they improving? If so, how fast will this translate into lower cost for Canadian businesses? Note: Unexpected global events may affect the supply and push prices up higher.



·      Inflation and Inflation expectations: Are they both coming back down? If yes, short term momentum should indicate how deep-rooted price pressures are.

The Bank of Canada will continue to watch and assess to see if they need to raise the interest rate further noting “We have a careful eye on many different things—we have a lot of work ahead of us, and we will not rest easy until we can get inflation back to target.”

Source: https://www.bankofcanada.ca/2022/09/getting-inflation-back-to-normal/