interest rate

Thursday October 26, 2023

Yesterday’s announcements highlight the challenges of high inflation and housing costs in Canada. The report on food banks shows the growing need for affordable options, while the Bank of Canada's focus on managing inflation could lead to rate hikes. It's clear that addressing affordability, inflation, and social support is crucial.

Editorial Cartoon by Graeme MacKay, The Hamilton Spectator – Thursday October 26, 2023

From Food Banks to Interest Rates: A Tale of Two Economies

September 19, 2023

In yesterday’s announcements, we see two contrasting situations that shed light on different aspects of the Canadian economy. On one hand, we have the report on food banks, highlighting the growing number of Canadians struggling with high inflation and housing costs. On the other hand, we have the Bank of Canada’s announcement of holding the key interest rate steady, but with a possibility of future rate hikes due to persistent inflationary pressures.

News: Food Banks Canada report paints dire picture of Canada-wide affordability crisis  

The report on food banks reveals the heartbreaking reality faced by many Canadians. The record-breaking number of people accessing food bank services reflects the challenges faced by individuals and families as they grapple with low wages, high rents, and rising costs. The report emphasizes that the issue of food insecurity is not limited to specific demographics but affects a wide range of people, including seniors, single mothers, low-income workers, people on social assistance, immigrants, and even those in higher income brackets. It calls for long-term social policy investments, such as affordable housing and increased fixed income rates, to address these challenges effectively.

April 13, 2023

In contrast, the Bank of Canada’s announcement focuses on the central bank’s efforts to manage inflation and ensure price stability. While the key interest rate remains steady for now, Governor Tiff Macklem has not ruled out the possibility of future rate hikes if inflationary pressures persist. The bank’s hawkish tone reflects its commitment to maintaining tight financial conditions to support economic growth and bring inflation back to the target of two percent. The bank’s quarterly monetary policy report forecasts slower economic growth in the short term but expects inflation to remain higher than the target until 2024.

News: Tiff Macklem to keep the Bank of Canada’s policy rate at 5 per cent, the highest level in two decades  

December 10, 2021

These two announcements highlight the interconnectedness of economic factors and the challenges faced by individuals and the broader economy. While food bank usage reflects the struggles of everyday people, the Bank of Canada’s focus on inflation and interest rates demonstrates the central bank’s role in managing the overall economy. Both announcements underscore the need for comprehensive and coordinated efforts from both government and monetary authorities to address the issues of affordability, inflation, and social support.

Ultimately, it is crucial for policymakers to consider the broader impact of their decisions on the well-being of individuals and the overall economy. By addressing the underlying causes of food insecurity, such as affordable housing and livable wages, and carefully managing monetary policy to ensure price stability, a more balanced and equitable economic landscape can be achieved. (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:

 

Saturday March 4, 2023

Editorial Cartoon by Graeme MacKay, The Hamilton Spectator – Saturday March 4, 2023

Interest rates have skyrocketed. So why hasn’t the rate on your savings account budged?

As anyone with a mortgage can attest, the cost to borrow money has gotten a lot more expensive this year. Banks were swift to pass on the rate hikes the Bank of Canada implemented as part of its aggressive campaign to tame inflation.

May 2, 2020

Variable rate home loans routinely top five per cent right now, more than twice what they were a year ago.

But the same can’t be said of savings accounts, which are not paying out much more today than they were a year ago, when the Bank of Canada’s lending rate was 0.25 per cent — its lowest level on record.

Canada’s five biggest banks offer a basic savings account with a rate paying between 0.01 and 0.035 per cent at the moment. So, if you are saving $1,000 for a year, you could earn a grand total of 10 to 35 cents in interest.

Even their so-called high-interest savings accounts that come with minimum balances and other stipulations all pay less than two per cent on an annualized basis.

CBC News reached out to Royal Bank, TD Bank, CIBC, Scotiabank and the Bank of Montreal this week, asking for an explanation as to why savings account rates seem to be slow to rise while lending rates do not, and all the responses were versions of a similar theme: that their rates are based on a variety of funding costs, and while rates on savings accounts are competitive, customers can often get higher rates with products such as GICs that lock in their money for a longer term.

May 13, 2010

Natasha Macmillan, director of everyday banking with rate comparison website Ratehub.ca, says consumers are keenly aware of that gap between what’s happening to the rates on what they owe versus what they have to save.

“As soon as the Bank of Canada raises their interest rate, we see that being translated immediately on the borrowing side,” she told CBC News in an interview. “But it does take a little bit slower for it to be translated to the high-interest saving side — not quite as quickly [and] not quite at the same rate.”

Natasha Macmillan, director of everyday banking with rate comparison website Ratehub.ca, says consumers are keenly aware of that gap between what’s happening to the rates on what they owe versus what they have to save.

“As soon as the Bank of Canada raises their interest rate, we see that being translated immediately on the borrowing side,” she told CBC News in an interview. “But it does take a little bit slower for it to be translated to the high-interest saving side — not quite as quickly [and] not quite at the same rate.” 

That’s not happening today, and there are a few reasons why… (Continued: CBC) 

 

Thursday January 27, 2022

Editorial Cartoon by Graeme MacKay, The Hamilton Spectator – Thursday January 27, 2022

Despite record high inflation, Bank of Canada holds interest rate steady — for now

May 2, 2020

The Bank of Canada has decided not to raise its benchmark interest rate just yet.

Like many other central banks around the world, the bank slashed its core lending rate — known as the target for the overnight rate — at the onset of the pandemic in March 2020, to ensure that consumers and businesses had access to cheap lending in order to keep the economy afloat.

But two years of rock-bottom lending rates have been a major contributor to inflation, which rose to almost five per cent in Canada last month — its highest level in more than 30 years.