*Updated* Ongoing Bank of Canada Benchmark Rate Announcements

[opendoor]

But there are several countries that started raising rates in mid to late-2021 and it did little to nothing to curtail their inflation. These countries started raising rates in:

May 2021:

Iceland: currently at 9.3% inflation, slightly down from their 9.9% peak.

June 2021:

Mexico: currently at 8.7% inflation which is their peak.

August 2021:

South Korea: currently at 5.6% inflation, down from their July peak of 6.3%.

Czech Republic: currently at 18% inflation

September 2021:

Norway: currently at 6.9% inflation which is their peak.

October 2021:

New Zealand: currently at peak inflation of 7.3%

Poland: currently at peak inflation of 17.2%


I mean, is there a single instance of an industrialized country raising rates in 2021 and then largely escaping inflation pressures? I can't think of any. The ones that have maintained relatively low inflation are also countries which have suffered from deflation risks in recent years/decades and had (or have in some cases) negative interest rates until very recently.

[Slava]

Originally Posted by opendoor

But there are several countries that started raising rates in mid to late-2021 and it did little to nothing to curtail their inflation. These countries started raising rates in:

May 2021:

Iceland: currently at 9.3% inflation, slightly down from their 9.9% peak.

June 2021:

Mexico: currently at 8.7% inflation which is their peak.

August 2021:

South Korea: currently at 5.6% inflation, down from their July peak of 6.3%.

Czech Republic: currently at 18% inflation

September 2021:

Norway: currently at 6.9% inflation which is their peak.

October 2021:

New Zealand: currently at peak inflation of 7.3%

Poland: currently at peak inflation of 17.2%


I mean, is there a single instance of an industrialized country raising rates in 2021 and then largely escaping inflation pressures? I can't think of any. The ones that have maintained relatively low inflation are also countries which have suffered from deflation risks in recent years/decades and had (or have in some cases) negative interest rates until very recently.

Well there are a couple types of inflation. There is cyclical and acyclical. Central banks can’t do much about the acyclical inflation. Think of things like food prices, oil and that type of thing. The BoC boosts rates and it literally has zero impact on the price of oil or gas at the pumps. This is what makes it such a difficult position to be in.

[blankall]

Originally Posted by opendoor

But there are several countries that started raising rates in mid to late-2021 and it did little to nothing to curtail their inflation. These countries started raising rates in:

May 2021:

Iceland: currently at 9.3% inflation, slightly down from their 9.9% peak.

June 2021:

Mexico: currently at 8.7% inflation which is their peak.

August 2021:

South Korea: currently at 5.6% inflation, down from their July peak of 6.3%.

Czech Republic: currently at 18% inflation

September 2021:

Norway: currently at 6.9% inflation which is their peak.

October 2021:

New Zealand: currently at peak inflation of 7.3%

Poland: currently at peak inflation of 17.2%


I mean, is there a single instance of an industrialized country raising rates in 2021 and then largely escaping inflation pressures? I can't think of any. The ones that have maintained relatively low inflation are also countries which have suffered from deflation risks in recent years/decades and had (or have in some cases) negative interest rates until very recently.

Everyone knows that there are a bunch of other issues causing inflation, notably: Ukraine/Russia conflict, supply chain issues, China's economic and manufacturing slowdown, distribution of free money during Covid, etc...

Raising interest rates at this stage still seems necessary to stop inflation from ballooning even further.

[The Fisher Account]

I’m going to be paying close to $1000 more a month than I did in 2020

[Johnny199r]

Will be interesting to see the impact on the housing market next year. Will prices continue to come down from their insane highs?

[timun]

Absolutely it'll affect prices; lots of people can't afford paying $1000+ more per month for their mortgages. (Hopefully The Fisher Account can swing it...)

[Weitz]

Originally Posted by Johnny199r

Will be interesting to see the impact on the housing market next year. Will prices continue to come down from their insane highs?

Toronto and Vancouver will not change. Everywhere else will hurt.

[chedder]

Originally Posted by Weitz

Toronto and Vancouver will not change. Everywhere else will hurt.

Many economists are predicting 30% price drops for both. Which only puts pricing back to 2 years ago at most.

[Johnny199r]

Originally Posted by Weitz

Toronto and Vancouver will not change. Everywhere else will hurt.

I think that very central Toronto and Vancouver won't be hurt too bad. I think suburban "drive until you qualify" Toronto and Vancouver will have quite big price declines.

[Yoho]

Originally Posted by Weitz

Toronto and Vancouver will not change. Everywhere else will hurt.

Doubt they are on UBS top 10 list of real estate bubble cities in the world and they won’t be effected or see significant change.

This is exactly the horror story mortgage target audiences.
When job losses start they could be a blood bath?

[blankall]

Originally Posted by chedder

Many economists are predicting 30% price drops for both. Which only puts pricing back to 2 years ago at most.

Like I said before adjustments happen in Vancouver every few years already. Then the march back to restarts. 30% would be on the higher side, but not unheard of.

There's very limited amounts of land and homes in both cities. As the land gets rezoned it gains value for investors. There's also such a shortage of strata homes that Vancouver needs to rezone as soon as possible. Huge mess for everyone but existing owners.

Also are you sure the predictions you were reading were about Vancouver and not the Vancouver metro area. Because prices in the outlying areas are already down over 20% in metro Vancouver but holding relatively strong in Vancouver proper.

[Winsor_Pilates]

Originally Posted by chedder

Many economists are predicting 30% price drops for both. Which only puts pricing back to 2 years ago at most.

I caution you or anyone to check with the same economists predicted for these markets 2 years ago. They probably said the same thing then.

[chedder]

Originally Posted by Winsor_Pilates

I caution you or anyone to check with the same economists predicted for these markets 2 years ago. They probably said the same thing then.

I have no skin in this game as I don't live in either place. But you have to think that prices in both cities can't just continue up forever without corrections. They are both listed as among the bubbliest cities in the world (Toronto #2 and Vancouver #6 according to UBS one year ago).

https://www.visualcapitalist.com/wor...bbles-in-2021/

[Yoho]

https://twitter.com/user/status/1592606606222823424

[blankall]

Originally Posted by chedder

I have no skin in this game as I don't live in either place. But you have to think that prices in both cities can't just continue up forever without corrections. They are both listed as among the bubbliest cities in the world (Toronto #2 and Vancouver #6 according to UBS one year ago).

https://www.visualcapitalist.com/wor...bbles-in-2021/

Also two very quickly growing cities, both with horrid zoning that prevents creating enough density to satisfy demand.

[Bring_Back_Shantz]

Originally Posted by Yoho

https://twitter.com/user/status/1592606606222823424

A courtesy letter, written in a professional, matter of fact tone, advising someone that the contract they signed, that included the risk that their payments might go up has now reached a point where that exact scenario is happening?

The horror!
The Bastards!

[Johnny199r]

Originally Posted by Bring_Back_Shantz

A courtesy letter, written in a professional, matter of fact tone, advising someone that the contract they signed, that included the risk that their payments might go up has now reached a point where that exact scenario is happening?

The horror!
The Bastards!

But I thought rates would never go up! I'm being taken advantage of!

[OldDutch]

Originally Posted by Bring_Back_Shantz

A courtesy letter, written in a professional, matter of fact tone, advising someone that the contract they signed, that included the risk that their payments might go up has now reached a point where that exact scenario is happening?

The horror!
The Bastards!

I think this is the point where the NDP steps in and shames the greedy bankers and pledges to ban variable mortgages in instances where the borrower loses.

[Yoho]

Originally Posted by Bring_Back_Shantz

A courtesy letter, written in a professional, matter of fact tone, advising someone that the contract they signed, that included the risk that their payments might go up has now reached a point where that exact scenario is happening?

The horror!
The Bastards!

It was simply an informative post.

[Mazrim]

Originally Posted by Yoho

It was simply an informative post.

If only there was some way to add context to the news articles and tweets you always share here. Some way to add text below the links. Maybe if this was a forum where people shared their thoughts...