Quote:
Originally Posted by AFireInside
Maybe I'm wrong on this, but isn't kind of clear that the government lowered to the interest rates to spur growth? Or prevent a complete collapse of the economy? Sounds like arbitrarily setting the rates to me... Obviously they do it to keep inflation at certain levels but they lowered to encourage growth and prevent disaster...
|
Perhaps I used the wrong word. The BOC sets the rates based on their economic forecasts with the intention of keeping inflation at a certain level based on how the economy is performing. I suppose it is an arbitration like process to determine the number. What I meant was that they're not launching darts at a board or thinking along the lines of we had it at 0 so we better move it up to 8% to make back some money. If the rate was to move to 8%, it's because the economy is going full bore and needs to be reigned in. Just like it went so low to help prevent deflation.
So for a lot of people who'd be facing a higher interest rate on their mortgagte, they should also be making a better wage at the time.