Some fear Bank of Canada Gov. Tiff Macklem is poised to raise rates again in July in a bid to drive inflation down to its target. ‘It’s two per cent or bust,’ says one economist.
Some fear Bank of Canada Gov. Tiff Macklem is poised to raise rates again in July in a bid to drive inflation down to its target. ‘It’s two per cent or bust,’ says one economist.
Unprecedented times? Hardly.
The annual inflation rate from 1971 to 1991 bounced between roughly 5% and 12%. It was only after BoC adopted the 2% target in the early 1990s that the inflation rate moderated.
My first car loan was through Chrysler, and 'discounted ’ to 11% from the 13% bank rate. That was for a Dodge Colt 200E. No AC, no cruise control, roll your own windows, no radio, no rear wiper, all for roughly $9500, almost $20K in today’s money.
Mortgages peaked just over 20% in 1981. My first mortgage was close to 6% in the 1990s.
The “unprecedented” time was that period from roughly 1993 until prior to the pandemic of very low interest and inflation rates.
That’s fair, but it’s not the whole story. Fact is things were more affordable then, particularly for people in entry-level type jobs making near minimum wage. Look at things like median wage vs median cost of housing, and you see a very different storey, even with high interest rates.