Interest rates

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:

 

Tuesday July 18, 2023

Editorial Cartoon by Graeme MacKay, The Hamilton Spectator – Tuesday July 18, 2023

The Struggles of Staying Home: Variants of Concern and Skyrocketing Interest Rates

November 30, 2021

In recent times, people have been facing multiple challenges that keep them confined to their homes. Two significant issues that have played a role in this situation are the emergence of Variants of Concern (VOC) during the COVID-19 pandemic and the sudden increase in interest rates, impacting variable rate mortgages. These circumstances have led individuals to prioritize financial stability over indulging in luxury and recreational activities like visiting restaurants, bars, movies, and vacations. Let’s explore the impact of these interconnected factors on people’s lives.

The COVID-19 pandemic has witnessed the emergence of various variants of the virus. While most variants do not significantly alter the virus’s properties or its impact on communities, some Variants of Concern have raised alarms. These variants exhibit changes that affect crucial factors such as transmissibility, virulence, vaccine effectiveness, and diagnostic testing. Detecting and monitoring these variants is of utmost importance to prevent their rapid spread and devise appropriate strategies to contain the virus.

January 30, 2021

One such method used to identify VOC was through the testing of wastewater in Ottawa. However, due to limited funding, the rapid and cost-effective testing method for variants will soon cease. This decision has raised concerns among scientists and researchers who stress the importance of timely and frequent monitoring of variants. Identifying emerging VOC and estimating their growth within a community becomes increasingly challenging when testing frequency is low. It is vital to maintain robust monitoring systems to stay ahead of the ever-evolving COVID-19 virus.

January 27, 2022

In parallel, the recent surge in interest rates has significantly impacted homeowners with variable rate mortgages. The Bank of Canada’s consecutive interest rate hikes have left borrowers grappling with higher borrowing costs. This increase comes after a brief respite when interest rates remained steady, fueling a surge in home sales and prices reminiscent of the pandemic’s real estate boom. However, the central bank’s efforts to curb inflation have now placed borrowers under mounting pressure.

Variable-rate mortgage borrowers face the immediate burden of rising costs as more of their monthly payments are allocated towards interest rather than reducing the size of their loans. Consequently, the length of their loan repayment periods automatically extends to maintain steady payments. While some borrowers managed to make additional payments during the rate reprieve, the recent interest rate hikes will further stretch their amortization periods. As a result, borrowers will face higher monthly payments when their loans come up for renewal, leading to potential financial strain.

June 22, 2021

The impact of these rising interest rates is also evident in the housing market, particularly in major cities like Toronto. The market, once characterized by frenzied activity, has started to show signs of cooling. Home sales have decreased, reflecting buyers’ growing caution and concerns about future increases in interest rates. The once-enticing real estate landscape has now become a cause for hesitation and financial prudence.

These converging challenges have limited people’s mobility and hindered their ability to engage in leisurely pursuits. The combination of Variants of Concern and rising interest rates has reshaped priorities, pushing individuals to focus on financial stability rather than indulging in luxuries or non-essential activities. Restaurants, bars, movies, and vacations have taken a backseat as people adapt to the new reality, emphasizing the importance of financial planning and prudent decision-making.

As we navigate these challenging times, it is crucial to find a balance between safeguarding public health and maintaining economic stability. Timely monitoring and surveillance of COVID-19 variants, along with supportive measures to help borrowers cope with rising interest rates, will be essential in enabling individuals to regain a sense of normalcy. By addressing these concerns, we can strive to create a safer and more sustainable future, where people can confidently venture out from their homes without compromising their well-being or financial security. (AI)

Friday June 9, 2023

Editorial Cartoon by Graeme MacKay, The Hamilton Spectator – Friday June 9, 2023

Navigating Turbulent Economic Times Ahead

January 24, 2023

Prime Minister Justin Trudeau is facing a critical challenge as he grapples with the effects of steeply rising interest rates on Canadians. The recent decision by the Bank of Canada to raise its benchmark interest rate to 4.75 percent, the highest level in over two decades, has raised concerns about the potential consequences for individuals and families across the country.

The immediate impact of these rising interest rates is being felt by both mortgage holders and renters. The cost of borrowing has increased, making it more challenging for individuals to afford their mortgage payments or find affordable rental options. As a result, there is a growing risk of foreclosures, insolvencies, and bankruptcies, which can lead to a cycle of poverty, homelessness, and other social issues.

Analysis: The painful end of free money as real interest rates start to rise  

May 10, 2022

Moreover, a recent survey conducted by the non-profit Angus Reid Institute indicates that rising living costs have become a significant issue for Canadians, with 63 percent of respondents identifying it as their top concern. This widespread economic worry is now correlated with a loss of support for the ruling Liberal party, particularly among its own voter base. Former Liberal supporters are increasingly seeking alternative options in search of relief from the financial burden they face.

The decline in support for the Liberal party is notable, as it comes after the party had successfully won a minority government in 2021. The survey reveals that 41 percent of struggling former Liberal voters and 44 percent of uncomfortable former Liberal voters would not commit to supporting the party again. While the largest portion of these former Liberal supporters would consider voting for the NDP, who have been supporting the minority Liberal government through a confidence-and-supply agreement, this trend poses a concern for the Liberal party strategists.

October 28, 2022

Prime Minister Trudeau must now address the challenges posed by rising interest rates and the economic hardships faced by Canadians. It is crucial for his government to develop a comprehensive plan that prioritizes the needs of individuals and families who are most affected by the rising cost of living. This plan should include measures to support those at risk of foreclosure, insolvency, and homelessness, as well as initiatives to alleviate poverty, hunger, and addiction.

News: More Bank of Canada rate hikes could ‘spell trouble’ as more people struggle with finances  

Additionally, the government must focus on improving housing affordability, healthcare access, and addressing climate change concerns. These issues were identified as top priorities by Canadians in the Angus Reid survey and must be tackled to restore public confidence in the Liberal party’s ability to address their needs effectively.

September 8, 2022

The Liberal Government should also consider working closely with the Bank of Canada to monitor the impact of interest rate hikes on the economy and make necessary adjustments to support vulnerable individuals and businesses. Collaboration between fiscal and monetary authorities is crucial to strike a balance between curbing inflation and mitigating the adverse effects on Canadians.

Prime Minister Trudeau must take swift and decisive action to navigate the challenges posed by steeply rising interest rates. By implementing a comprehensive plan that addresses the immediate needs of Canadians, while also focusing on long-term solutions, the government can alleviate the economic hardships faced by individuals and families. This will not only restore confidence in the ruling party but also demonstrate a commitment to the well-being and prosperity of all Canadians. (AI)

 

Wednesday June 7, 2023

Editorial Cartoon by Graeme MacKay, The Hamilton Spectator – Wednesday June 7, 2023

Building Houses, Rising Interest Rates, and Homelessness: The Real Concerns for Canadians

June 2, 2023

While the House of Commons Foreign Interference in Canada’s Electoral System Committee investigation continues to make headlines, it’s important to question whether this issue truly occupies the top of mind for Canadians. The allegations surrounding foreign interference, although significant, pale in comparison to the pressing concerns that directly impact the lives of ordinary Canadians: building houses on green spaces, the Bank of Canada raising interest rates affecting those renting or paying mortgages, and the growing crisis of homelessness in our nation.

August 12, 2022

Recent polls have shed light on the priorities of Canadians, and the results are clear. A CIBC poll revealed that homeownership remains a driving goal for 71% of non-homeowners surveyed, despite concerns about affordability due to high interest rates and rising house prices. It’s evident that Canadians are worried about the ability to attain the dream of owning a home, and many parents plan to assist their children with down payments to bridge the affordability gap. The Bank of Montreal’s survey further confirmed these concerns, with 68% of Canadians planning to wait for lower interest rates before purchasing a home. The anxiety surrounding housing affordability, coupled with fears of unknown expenses and overall financial situations, are prominent worries for Canadians.

Opinion: Is the media fuelling Canada’s foreign interference scandal? 

January 27, 2022

As speculation mounts about the Bank of Canada raising interest rates once again, those with mortgages are rightfully concerned about the potential impact on their financial stability. The central bank’s pause on rate hikes earlier this year was contingent on the economy developing as anticipated and inflation continuing to fall. However, recent data suggests that these conditions may no longer be met. With a robust 3.1% annual pace of economic expansion in the first quarter and an inflation rate that ticked up to 4.4%, the Bank of Canada may feel compelled to step off the sidelines and take action. This looming possibility adds further apprehension for Canadians who are already grappling with the challenges of housing affordability.

While some Canadians worry about homeownership, others face a much more dire situation: homelessness. Tent cities, once limited to troubled corners of Vancouver or Toronto, have now proliferated across the country. Calgary was forced to dismantle a downtown encampment due to escalating violence, while permanent tent cities have sprung up in parks throughout Halifax. Tragic incidents, such as the murder of an RCMP officer during a routine call to a Burnaby homeless encampment, highlight the urgency of addressing this crisis. A recent poll conducted by Leger for Postmedia revealed that a majority of Canadians (58%) believe homelessness is a problem in their community, with 38% reporting increased acts of violence. In British Columbia, where the issue is particularly acute, an astonishing 87% of respondents identified homelessness as a problem.

October 25, 2022

These poll results paint a bleak picture of public sentiment towards government action on homelessness. Only 7% of respondents think the government is making things better, while 16% believe they are making things worse. The overwhelming perception is that governments are doing nothing at all to address this pressing issue.

In light of these concerns, it is crucial to reevaluate our priorities. While foreign interference in Canada’s electoral system merits attention, we must ensure that it doesn’t overshadow the urgent issues affecting Canadians’ daily lives. Building houses on green spaces threatens our environment and food security, while rising interest rates pose significant challenges to homeownership and financial stability. Most critically, homelessness is a crisis that demands immediate action to provide shelter, support, and dignity for the most vulnerable members of our society.

May 30, 2023

It is time for governments at all levels to listen to the concerns of Canadians and address the issues that truly matter. We need comprehensive strategies to protect our green spaces, make housing more affordable, and provide adequate resources to combat homelessness. Canadians deserve a government that prioritizes their well-being and works diligently to create a society where everyone has a place to call home. (AI) | Editorial Cartoon also printed in the Toronto Star.

 

Tuesday January 24, 2023

Editorial Cartoon by Graeme MacKay, The Hamilton Spectator – Tuesday January 24, 2023

Liberal Cabinet Retreat

Prime Minister Justin Trudeau made his first stop in Hamilton Monday a chance to grab lunch to go with MP Filomena Tassi at The Burnt Tongue on Locke Street.

October 28, 2022

The prime minister and his cabinet are staying in town this week from Jan. 23 to 25 for their post-holiday retreat.

After ordering a cheeseburger and broccoli cheddar soup, Trudeau took a moment to shake hands with the lunch crowd and pose for some photos.

Leaving the restaurant, he posed for a photo with Ashley Acacio and her three-week-old son Mac in his stroller, even correcting the position of a staffer taking a photo for the pair.

On the way to his vehicle, Trudeau hopped on an HSR bus that stopped to greet riders.

Meanwhile, about 200 demonstrators gathered downtown Monday to protest the retreat, calling for migrant rights. They were joined by anti-war demonstrators and about 25 anti-Trudeau and anti-vaccine mandate protesters.

The protesters marched along Main Street, across Summers Lane and blocked King Street in front of the Sheraton Hamilton Hotel for around 20 minutes.

Trudeau’s itinerary said he is expected to attend the retreat, which will focus on affordability and the economy, at 5:30 p.m. Monday. (Toronto Star) 

December 9, 2022

Meanwhile, it’s at the grocery store. It’s at the gas pumps. It’s at your favourite restaurant.

Nearly everywhere Canadians have gone in the past year, every bill might as well have had an extra charge tacked on to the bottom reading simply: inflation.

A shorthand for what’s essentially the rising cost of living, inflation swept across the globe in 2022 and Canada was not immune from its sting.

Canadians eager to travel in June after years of COVID-19 restrictions were met by a 49.7 per cent year-over-year hike in the cost of accommodations. The rest of that summer saw the average price for regular gasoline soar past $2 per litre in many parts of the country. And in October, Canadians were paying 44.8 per cent more for pasta from the grocery store than the same month a year earlier.

April 25, 2014

Poll after poll showed how stretched Canadian dollars had become amid 40-year highs in inflation, with many forced to make impossible decisions about how to feed their families, pay for medications and keep a roof over their heads.

More than a third (36 per cent) of Canadians say their financial situations are very bad or somewhat bad heading into 2023, according to Ipsos Public Affairs polling conducted exclusively for Global News between Dec. 14 and 16. (Global News) 

In the swearing-in of cabinet following the 2021 federal election, the dropping of the awkwardly named Minister of Middle-Class Prosperity, held by Mona Fortier, signalled the short termed portfolio (2019-2021) was an ill conceived addition to the executive team under Prime Minister Trudeau.