OMG, Think of the Children!!!
Let’s be clear: the Bank of Canada’s overnight rate increase from 0.50% to 0.75% is just a 0.25% hike. Don’t let the numbers fool you into thinking it’s a bigger deal than it really is. After June’s 100% jump who knows what is next!
This increase was expected due to possible inflationary pressure on the economy and an attempt to possibly put the brakes on any rampant spending about to start up.
An interesting statement is:
The Bank expects the economic recovery in Canada to be more gradual than it had projected in its April MPR, with growth of 3.5 per cent in 2010, 2.9 per cent in 2011, and 2.2 per cent in 2012. This revision reflects a slightly weaker profile for global economic growth and more modest consumption growth in Canada. The Bank anticipates that business investment and net exports will make a relatively larger contribution to growth.
The economy is recovering, but not as fast as everyone thinks it is, so we won’t try to be the buzz-killers for the growth (yet), but stay tuned, we may turn the “free money” faucets off soon.
What was the best comment by the Bank of Canada in their announcement?
Given the considerable uncertainty surrounding the outlook, any further reduction of monetary stimulus would have to be weighed carefully against domestic and global economic developments.
My translation of this statement is, we really don’t know how things are going to go in the next little while, so we reserve the right to possibly increase the rate again, but we probably won’t. Yes, that is about as wishy-washy as I can make my interpretation.
Remember where the Bank of Canada thinks the CPI is at currently:
Moral of this rate increase? It is going to get harder to pay down those loans soon, because the interest rates will be going up soon, so maybe think about investing in paying off your debts now.
This video answered my questions about why an RESP is the best way to save money for my children’s future.
Yes, I think it’s time to utilizes all the saving and investing that have been made. Great article. Thanks.
Yes, interest rates are getting ugly! Good for those who are investing and saving money but bad for those of us who have plenty of school loans!
Time to pay those off!
For several reasons, we needed to ‘blend and extend’ our current not-too-attractive 5.15% locked-in mortgage that was nearing the end of its term, but I had been putting it off since the beginning of the month.
On Monday, when the one-year rate of our lender had dropped to 2.1-something% I finally got around to picking up the phone and did the deed, oblivious to the fact that a rate announcement was coming up. (Yes, I read you, and several others, and I pay attention, but I don’t necessarily remember everything) By the next day, their one-year rate was up to 2.80%.
Since we opted to keep our payments the same, we are paying off about $100 a month in principal on the mortgage. In the spirit of a recent post, I believe this does qualify as ‘saving’, because the money will come back to us, with interest, plus we will have saved some (minute) interest on the mortgage as well.
I always pick slow check-out lines, but I got lucky here. I’ll take the trade-off 🙂
Yes, that is saving, even if you are spending too 🙂