Quote:
Originally Posted by calgarygeologist
That increase in mortgage interest drives up the inflation rate potentially making it more difficult for the Bank of Canada to combat inflation appropriately. In January, mortgage interest continued to be the #1 driver of inflation with a 27% growth rate. If the Bank of Canada is trying to hit 2% and one component of the calculation is going to be increasing at 20%, 30% or 40% that target could be out of reach.
That doesn't even touch on the issue that housing is the biggest part of a household budget and the upcoming increases could be brutal for household finances.
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Somebody smarter than me can probably put me in my uneducated place, but I think this means we are going to see is a divergence between affordability and inflation, as it relates to setting the funds rate. Including the impacts of mortgage interest directly impacts affordability, excluding it gives a better measure of inflation.
Inflation to me used to be the change in the cost of raw materials only, now it's everything.
Does this change mean now it's only some things?