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Thursday June 6, 2024

Editorial Cartoon by Graeme MacKay, The Hamilton Spectator – Thursday June 6, 2024

Borrowers Ride the Wave of Rate Cuts Amidst Rising Living Costs

Innovative leadership is essential to address Canada's inflation crisis, bridging the gap between optimistic official statistics and the harsh financial realities many Canadians face.

May 31, 2024

The economic landscape resembles a carnival ride for borrowers, offering moments of relief intertwined with daunting challenges. The recent decision by the Bank of Canada to cut its overnight rate for the first time in over four years has injected a sense of optimism into the economy. However, this optimism is tempered by the harsh reality of continuous rises in living costs. As borrowers embark on this rollercoaster journey, they must navigate the twists and turns of economic uncertainty while grappling with the impact of inflation on their financial stability.

News: Bank of Canada cuts key rate for first time in more than 4 years

Loud budgeting emerges as a powerful societal roar against corporate exploitation, stagnant wages, and governmental financial burdens, empowering individuals to reclaim control over their finances and challenge systemic inequities.

March 11, 2024

Borrowers across Canada buckle up as the rollercoaster of economic recovery sets off. The Bank of Canada’s decision to cut its overnight rate by 25 basis points, a move not seen since the beginning of the pandemic, offers a glimmer of hope. With the policy rate now at 4.75%, borrowers anticipate lower borrowing costs, providing a much-needed respite from financial strain. Bank of Canada Governor Tiff Macklem’s confidence in the easing of underlying inflation levels adds to the sense of optimism, as borrowers brace themselves for a smoother ride ahead.

However, the rollercoaster takes an unexpected plunge, plunging borrowers into the harsh reality of rising living costs. Despite the rate cut, inflation remains a persistent threat, with the inflation rate standing at 2.7% in April. The economy’s growth of 1.7% in the first quarter of 2024 falls below expectations, signalling underlying challenges. While employment figures show signs of improvement, wage pressures continue to linger, casting a shadow over borrowers’ financial well-being.

Despite falling inflation, the Bank of Canada is likely to keep interest rates steady, raising questions about an immediate drop in borrowing costs.

March 5, 2024

As the rollercoaster navigates its twists and turns, borrowers find themselves grappling with economic uncertainty. Bank of Canada Governor Macklem’s cautionary remarks remind borrowers of the delicate balance between rate cuts and inflation management. The decision on further rate cuts hangs in the balance, with risks to the inflation outlook remaining a concern. Borrowers must tread carefully, mindful of the uneven progress in bringing down inflation and the potential risks posed by hasty policy decisions.

As borrowers disembark from the economic rollercoaster, they are left pondering the lessons learned from their turbulent journey. While rate cuts offer a glimmer of hope, the challenges posed by rising living costs loom large. It is imperative that borrowers, policymakers, and stakeholders alike come together to advocate for economic stability and financial resilience. By navigating the twists and turns of economic uncertainty with prudence and foresight, borrowers can steer towards a brighter, more equitable future for all.

 

Friday September 8, 2023

Editorial Cartoon by Graeme MacKay, The Hamilton Spectator – Friday September 8, 2023

Chilling the Economic Heat: Macklem’s Freezer of Monetary Mastery

June 9, 2023

In a rather peculiar act that could be likened to a magician’s control over a giant freezer’s thermostat, Bank of Canada Governor Tiff Macklem took the stage. With a flourish, he presented an economic spectacle that had the audience in awe.

Mr. Macklem, the orchestrator of monetary policies, confidently declared that the central bank’s prized 2-percent inflation target was “now within reach.” This proclamation came just a day after the central bank had hit the pause button on its monetary tightening efforts, maintaining its key interest rate at 5 percent after two rate hikes during the summer.

News: Bank of Canada’s Macklem says rates may be high enough to ease inflation  

April 13, 2023

“With previous interest rate adjustments still percolating through the economy,” Macklem proclaimed, “monetary policy might just be chilly enough to restore price stability.” It was as if he possessed a magical dial to cool down the economy, akin to turning a giant freezer to lower temperatures.

However, amid this grand spectacle, ominous warnings lingered in the air. The governor cautioned that his team was ready to crank up the chill factor by raising rates again should consumer price growth stubbornly persist. Inflation, he lamented, was as elusive as finding ice cream in a snowstorm.

The Bank of Canada had embarked on an audacious journey, raising interest rates a whopping ten times in the past year-and-a-half. It was as if borrowers were trapped in a colossal freezer, with the mission to slow down spending and investment, allowing supply to catch up with demand, and, of course, to extinguish the flames of rising prices.

November 3, 2022

In a prior act of this economic drama, the bank had resumed its rate hikes after a five-month intermission, believing the economy was not cooling down swiftly enough to subdue inflation. However, a series of unfortunate events unfolded over the past month, changing the storyline and bringing a frosty breeze to the narrative.

Gross domestic product data revealed that the Canadian economy had indeed contracted in the second quarter, and the unemployment rate had increased by half a percentage point. Job vacancies, once as numerous as snowflakes in a blizzard, had dwindled compared to a year ago.

“The data since mid-July,” Macklem noted, “provide more evident proof that higher interest rates are moderating spending and restoring balance between supply and demand in the economy.” The central bank’s grip on the thermostat was undeniable.

Opinion: Tiff Macklem reads the tea leaves: Bank of Canada was right to hit pause on interest rates  

May 2, 2020

Yet, this chilly saga was far from its conclusion. Macklem, the vigilant conductor, struck a hawkish tone when addressing inflation. Despite a decline in the annual consumer price index growth, core inflation measures stubbornly clung to higher levels. Taming the inflationary beast was proving to be quite the challenge.

Amidst it all, Macklem tackled two burning questions. Should the bank exclude mortgage interest costs when assessing inflation, a notion as icy as the Arctic itself? Or, should the bank abandon its 2-percent inflation target in favor of a loftier goal, a move that would send shivers down many spines?

Macklem, in his dramatic denouement, stood resolute. “You don’t raise the target just because you missed it,” he declared, as if to tell the audience that the freezer’s temperature setting was immutable.

The grand finale of this frosty performance left no doubt: the 2-percent target was sacrosanct, an anchor in the icy sea of economic fluctuations. Stability, it seemed, was found in keeping the cost of living frozen around this magical number. And so, the economic theatre lowered its curtains, with Macklem’s symphony of monetary control echoing in the ears of all those who dared to listen. (AI)

From sketch to finish, see the current way Graeme completes an editorial cartoon using an iPencil, the Procreate app, and a couple of cheats on an iPad Pro. If you’re creative, give illustration a try:

 

Wednesday July 12, 2017

Editorial Cartoon by Graeme MacKay, The Hamilton Spectator – Wednesday July 12, 2017

Bank of Canada may hike interest rate for 1st time in 7 years

After almost a decade of warnings that never came to pass, it appears as though the Bank of Canada is ramping up to hike its benchmark interest rate — possibly as soon as next week.

July 16, 2015

On July 12, Canada’s central bank will announce its latest decision on where to place its trend-setting interest rate, which has an impact on the rates that Canadian borrowers and savers get for their bank accounts, mortgages and other products.

Eight times a year, the bank’s board of governors meets to assess the latest economic indicators and decide whether Canada’s economy needs a shot in the arm from a rate cut, or a pump of the brakes by way of a hike.

And for the first time in 54 such meetings, it’s looking like the latter is in order.

It’s not like there haven’t been warning signs. By the time Stephen Poloz was named to replace Mark Carney atop the bank in 2013, the central bank had already been on the sidelines for more than two years, its benchmark interest rate set at one per cent.

May 13, 2010

But even as the bank kept loans cheap coming out of the financial crisis, the messaging from the top came early and often that Canadians should be forewarned — rates have to go up eventually.

As far back as 2014 Poloz warned Canadians that rates would rise “soon” — before oil’s plunge in 2015 caused the bank to lose its nerve. Instead, the central bank moved in the opposite direction, cutting rates twice that year to bring its rate to 0.5 per cent, where it currently sits.

At the time, those hikes were described as a temporary measure to help a Canadian economy that had been waylaid by an oil price that lost more than 70 per cent of its value in a matter of months. But in recent weeks the bank has started leaving clear signals that despite oil still being in the $40-per-barrel range, those temporary conditions are over and it’s time for a return to normalcy. (Source: CBC News) 

 

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