Tag Archive for: inflation

CPI update for June 23

Well the CPI ( Consumer price index) numbers are out for the month and it has been reported that inflation for May has gone down a full percentage point from 4.4% to 3.4%. This has been the biggest monthly change since the inflation hit the peak of 8.1% in June of 2022, and the lowest rate since June of 2021. So it now give me some confidence that we will soon hit that 2% target.

The slowing of inflation in May, led by a significant drop in gasoline prices, according to Statistics Canada. The deceleration was down from 4.4% last month, with gasoline prices being the key factor in the data. Removing gasoline, the inflation rate was 4.4%. Despite the slowdown, many facets of living costs are still increasing sharply, such as grocery prices, which rose almost 9% in May, and the cost of housing, with mortgage interest costs skyrocketing to a record 29.9% increase. Shelter costs rose 4.7%, and rent increased by 5.6% in the past year.

The decline was largely due to base year effects from the impact of Russia’s invasion of Ukraine on international energy prices. The result was in line with the Bank of Canada’s baseline scenario, which expects inflation to slow to 3% by summer. The slowdown was attributed to a decline in energy prices, particularly gasoline, and eased supply chain bottlenecks for durable goods. However, mortgage interest costs saw the sharpest hike in history, driven by the high interest of the Bank of Canada. The core inflation rate also slowed more than expected to 3.7%. On a monthly basis, the CPI rose 0.4%.

The next up in this economic chess match will be the Bank of Canada’s next policy meeting on July 12th. Despite the decrease, some economists are warning that the Bank of Canada may still raise interest rates again in July. While the cooling in inflation may ease the pressure on the bank, more information is needed to determine the effect of inflation, with June’s job data and the Bank’s own business outlook survey among the metrics to be considered. Let’s take today’s good news with a grain of salt.

Today I am thankful for some pleasing economic news, a great early morning run and a new book discovered hidden away in my house.

I look forward to hearing from you in regard to your mortgage needs.

Patrick

p.s- You can click on this link to start the process whenever you are ready. Schedule your meeting with me here.

p.s.s- I should tell you that I am licensed in Nova Scotia Brokerage (2022-3000179) Broker (2022-3000180), Ontario(M18001555) & in British Columbia(BCFSA #504098).

p.s.s.s You can download my new mortgage app here

The Fine Print

The Bank of Canada will come out with their latest interest rate announcement at 10am eastern or 11am here in the Maritimes. While many of us are expecting at least a 75bps increase to the overnight lending rate, the real meat and potatoes will be in the press release from the meeting.

The devil truly is in the details, as the fourth quarter monetary policy is also announced today. The Bank will give details on whether it thinks that the current and past rate increases are doing what they were supposed to do and if more are necessary. While it is true that the overall inflationary rate is decreasing, it is just not coming down fast enough. It decreased by .1% to 6.9% this month, while the target rate is 2%. We still have a ways to go to get there.

Many economists are predicting a recession for 2023 and more rate increases will defiantly be pushing us in that direction. What we don’t know is the length or severity of the pull back to our economy and other major economies as well. We need to proactively cut back our discretionary spending before spending cuts and job losses are thrust upon us. What the Bank of Canada is doing is beyond our control but whether we decide to eat out or make supper at home is totally up to us.

Today I am thankful for the chance to connect with friends that I haven’t spoken with in months, new connections with new idea’s to improve my effectiveness and helping people see the best way forward.

I look forward to hearing from you in regard to your mortgage needs.

Patrick

p.s- You can click on this link to start the process whenever you are ready. Schedule your meeting with me here.

p.s.s- I should tell you that I am licensed in Nova Scotia Brokerage (2021-3000179) Broker (2021-3000180), Ontario(M18001555) & in British Columbia(BCFSA #504098).

p.s.s.s You can download my new mortgage app here

Everything is up

Everything is up but the paycheques. From food, gas, housing and even Netflix. Central banks around the world have been raising rates in the hopes of consumers putting the brakes on their spending. However if we stop spending too quickly it will put us into a recession. On the other side of it we still need to spend money just to live so something has to give.

The economy relies on consumers and businesses spending money but if rates and products rise too quickly then everyone will cut back on the spending all at once. The balance they say is a slow and steady change but that has not been happening with interest rates nor gasoline. It feels like a big game of chicken, someone has to give first and from all indications it seems like us cutting back on spending will happen well before prices and rates start to come back down.

The Bank of Canada raised it’s overnight lending rate this week by 50 basis points and further indicate that another rate increase maybe coming with the next meeting in July. Also with Russia showing no signs that is is through with their invasion of Ukraine so world oil prices will continue to stay high. So until these two things signal a change of course, tighten the purse strings as higher prices may be around for a while.

I look forward to hearing from you in regard to your mortgage needs.

Patrick

p.s- You can click on this link to start the process whenever you are ready. Schedule your meeting with me here.

p.s.s- I should tell you that I am licensed in Nova Scotia Brokerage (2021-3000179) Broker (2021-3000180), Ontario(M18001555) & in British Columbia(BCFSA #504098).

p.s.s.s You can download my new mortgage app here

New Record

The consumer price index ( how we track inflation) hit a 31 year high for the month of April at 6.8%. Up .1% from March. The increase is a result of higher food and housing costs. The causes of this stem from the war in Ukraine and supply chain disruptions in China due to Covid. While global crude oil prices declined in April, they have vastly increased in May so we may be in for another record for the May report.

As a result of the record high CPI we are pretty much guranteed for another Bank of Canada rate increase when they meet next on June 3rd. What we don’t know is if it will be another 50 basis points like the last time or just 25 basis points like the first increase we had earlier this year.

So while the costs of everything in life has been steadily rising, the wages that we are getting paid is not keeping up with the high costs of living. They did go up 3.3% as compared to last year but this is still not keeping pace with the costs to keep food on the table so sooner or later something will have to give.

I look forward to hearing from you in regard to your mortgage needs.

Patrick

p.s- You can click on this link to start the process whenever you are ready. Schedule your meeting with me here.

p.s.s- I should tell you that I am licensed in Nova Scotia Brokerage (2021-3000179) Broker (2021-3000180), Ontario(M18001555) & in British Columbia(BCFSA #504098).

p.s.s.s You can download my new mortgage app here

Rate increased

Just incase you were not watching the 5 year fixed insured AAA rate went up yesterday from 3.84% to 4.09% or an increase of 25 basis points. This is an increase of 120 basis points or 1.2% since the first of February. So it’s no wonder that the core inflation rate in Canada increased by 6.7% for the month of March. The costs of everything from fuel, food, housing and now mortgage rates have increased drastically.

So what are you doing to protect your self against the rising costs everything all around you. Are you cutting back on using your vehicle as much, have you stopped eating out, have you trimmed back some of the streaming services that you subscribe to for your entertainment or have you just buckled down and focused on working harder and putting more money away in the bank. The thing is the government wants us to continue to spend to keep the economy moving but also to cut back so we can tackle inflation.

We can’t have it both ways, something is going to have to give and if the rates increase too steeply and too quickly it may just push us into a recession as consumers and businesses cut back on any and all unnecessary spending. The next few months may be a bumpy ride so make sure that you are prepared the landing on the other side.

I look forward to hearing from you in regard to your mortgage needs.

Patrick

p.s- You can click on this link to start the process whenever you are ready. Schedule your meeting with me here.

p.s.s- I should tell you that I am licensed in Nova Scotia Brokerage (2021-3000179) Broker (2021-3000180), Ontario(M18001555) & in British Columbia(BCFSA #504098).

p.s.s.s You can download my new mortgage app here

The worst is over? Think again

As taken from the Globe & Mail. See my comments below.

The stock market would have you believe that the worst of the financial mess is over, and that it’s time again to buy, buy, buy. But Barry Ritholtz, who writes The Big Picture Blog, thinks the buying frenzy of the past week is a head fake that will end badly.

“The anticipated bear market bounce in financials has led to the usual fools’ chorus that the worst is behind us, the economy is on the mend, and a recession is avoided,” he said. “How’s the economy doing? You tell me.”

He then goes on to list (and it’s a long list) the problems that continue to plague the U.S. economy. For one, General Motors Corp. and Ford Motor Co. are suffering, but so is mighty Toyota Motor Corp., a sign that this isn’t an isolated slowdown affecting a couple of troubled names.

The nay-sayers are at it again. So there is no time better than the present to take control of you finances. The so called professional’s are not doing so hot at it. This is what I mean by that comment, I want you to take control of your finances so that the banks, credit card companies or any one you may owe money to is not in control over you. So that when the economy tanks, and no one is giving out credit any more ( well they are, but they are making it harder to get) and people still need it. I want you to be in a position where you can fund you own life style. Where you will not have to go hat in hand to the local bank or broker so you can rob Peter to pay Paul. Please contact my office so we can show you how to take back control and get back in the driver’s seat toward your own financial freedom.

Cheers,

Pat

BoC remains on hold as inflation fears rise

BREAKING NEWS FROM THE GLOBE AND MAIL

KEVIN CARMICHAEL

 

Tuesday, July 15, 2008

OTTAWA — The Bank of Canada left its benchmark interest rate at 3 per cent and predicted raging oil and food prices would cause inflation to surge past 4 per cent by early next year.

Governor Mark Carney and his five deputies on the governing council also cut their estimate for economic growth for 2008 to 1 per cent, which would be the weakest in almost two decades, citing “protracted weakness” in the U.S. economy and “ongoing turbulence” in financial markets.

The central bank’s decision to leave borrowing costs unchanged suggests Mr. Carney’s biggest concern is keeping a lid on Canadians’ expectations about prices. Policy makers raise and lower interest rates to keep inflation advancing at an annual rate of 2 per cent and are uncomfortable with prices advancing any faster than 3 per cent.

“Commodity prices are continuing to outstrip earlier expectations,” the Bank of Canada said in its statement today in Ottawa. “This has led to further increases in Canada’s terms of trade and real national income, and has altered the outlook for global and domestic inflation.”

There was little immediate reaction in financial markets as most investors and economists were expecting the Bank of Canada to leave interest rates unchanged. In the flurry of research notes that followed the central bank’s decision, economists said Mr. Carney is handcuffed by weaker growth and bubbling inflation, leaving him little choice but to stand pat.

“Overall inflation is growing concern for the Bank of Canada, but the bank’s growth worries will keep a hold on rates for the time being,” said Meny Grauman, an economist a CIBC World Markets in Toronto.

Win Thin, a currency strategist at Brown Brothers Harriman & Co. in New York, said the futures market for Overnights Index Swaps, where values are based on the underlying interest rate, suggests investors expect the Bank of Canada to lift borrowing costs by no more than a quarter point over the next 12 months, compared with expectations of a three-quarter point increase as recently as mid-June.

In its statement, the central bank called the risks to its outlook “balanced.”

The Bank of Canada also left its benchmark interest rate – the target it sets for overnight loans between banks – unchanged at 3 per cent at its last policy meeting in June, a move that surprised market players.

Before that announcement five weeks ago, policy makers had slashed their key rate by 1½ points over four decisions dating back to December, a campaign aimed at offsetting slumping U.S. demand for exports and the global credit crunch.

The priority now is persuading Canadian business owners and workers that their central bank will keep inflation from burning out of control.

One of the biggest worries at the central bank is that companies will start charging higher prices to compensate for higher commodity prices and workers will demand higher wages, sparking an inflation spiral.

There is some evidence this might already be happening. The central bank’s July survey of businesses showed 36 per cent of the companies expected inflation will climb above 3 per cent, compared with 17 per cent in April.

Policy makers stressed in their statement today that total inflation’s burst to 4 per cent in the first quarter of 2009 will be temporary. They predicted energy prices will stabilize, allowing inflation to ease back to 2 per cent by the second half of next year.

Canada’s economy hasn’t grown slower than 1 per cent since it advanced 0.9 per cent in 1992, one year after a recession, according to International Monetary Fund data.

Still, the central bank said little has happened to change its longer term growth outlook. Higher prices for exports, relatively low interest rates and a “gradual recovery” in the U.S. will spark a Canadian rebound starting early next year, the Bank of Canada said.

The central bank shaved its growth estimate for 2009 to 2.3 per cent from 2.4 per cent and left its projection for 2010 unchanged at 3.3 per cent.

The Bank of Canada will expand on its current thinking on the economy when it releases an updated policy report on Thursday. The central bank next meets to consider its benchmark interest rate on Sept. 3.