• MakingWork
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    1 year ago

    Interest rates are increased by the Bank of Canada to fight inflation. If the Bank of Canada pauses increasing rates then it may mean a few things:

    1. Inflation is at a level the Bank of Canada finds acceptable and doesn’t need to be increased any more at the moment. Pace is steady.
    2. Canadians would not be able to handle another rate increase. In other words, there would be too many defaults or non payments of loans back.
    3. Pausing increases on interest rates may also mean that not enough people are borrowing. This may mean that the GDP isn’t increasing enough, and the economy needs more people or businesses borrowing. Are less homes selling? Less vehicles being purchased? Less business debt?
    4. Another reason not mentioned here.

    Not increasing interest rates may also result in a weaker dollar, which means importing would be more expensive.

    All in all, I think a lot of people will see some relief with loan payments. However I worry goods will continue to increase in price.

    (Not an economist, this is pure opinion.)