*Updated* Ongoing Bank of Canada Benchmark Rate Announcements

[chemgear]

https://www.cbc.ca/news/business/inf...-may-1.6889725

Gasoline prices were the single biggest reason for the deceleration. If gasoline is stripped out, the inflation rate would be 4.4 per cent.

But beneath the headline slowdown in consumer prices, many facets of the cost of living are still increasing at an eye-watering pace.

Grocery prices went up at an almost nine per cent pace. That's barely lower than the 9.1 per cent pace clocked in April, and still almost three times the inflation rate.

Food prices have been increasing at a faster pace than the official inflation rate for more than a year now.

Leslie Preston, an economist with TD Bank, noted that if you strip out volatile items like gasoline and mortgages, underlying inflation is still probably warm enough that the Bank of Canada is likely to think at least one more rate hike is warranted at some point.

[opendoor]

Originally Posted by Sliver

I swear I took econ in university, but I honestly don't understand how this #### works. Anybody have a very basic explanation of what all this means?

Interest rates go up. People spend less, I assume? Then what? I don't get any of it, TBH.

Imagine a guy with a $300K HELOC. In 2021 he'd be paying $7.5K interest on that per year. Now he'd be paying $21K in interest a year. So that's $13.5K in his disposable income that used the be spent on goods/services that's now getting diverted to interest payments. So maybe instead of buying a new car, renovating his house, or taking a vacation, he holds off for a while because of that. That reduced demand for goods/services will tend to soften prices in the aggregate.

And beyond that, higher rates also incentivize saving and paying down debt. When borrowed money was basically free and savings accounts were paying 0.1% interest, you might as well spend the money. But now that you can get 5% guaranteed returns and debt is expensive, more money will move from chasing goods/services into savings and debt repayment.

[Sliver]

Originally Posted by opendoor

Imagine a guy with a $300K HELOC. In 2021 he'd be paying $7.5K interest on that per year. Now he'd be paying $21K in interest a year. So that's $13.5K in his disposable income that used the be spent on goods/services that's now getting diverted to interest payments. So maybe instead of buying a new car, renovating his house, or taking a vacation, he holds off for a while because of that. That reduced demand for goods/services will tend to soften prices in the aggregate.

And beyond that, higher rates also incentivize saving and paying down debt. When borrowed money was basically free and savings accounts were paying 0.1% interest, you might as well spend the money. But now that you can get 5% guaranteed returns and debt is expensive, more money will move from chasing goods/services into savings and debt repayment.

Got it. Thanks man...that's helpful.

[calgarygeologist]

Originally Posted by chemgear

https://www.cbc.ca/news/business/inf...-may-1.6889725

Gasoline prices were the single biggest reason for the deceleration. If gasoline is stripped out, the inflation rate would be 4.4 per cent.

But beneath the headline slowdown in consumer prices, many facets of the cost of living are still increasing at an eye-watering pace.

Grocery prices went up at an almost nine per cent pace. That's barely lower than the 9.1 per cent pace clocked in April, and still almost three times the inflation rate.

Food prices have been increasing at a faster pace than the official inflation rate for more than a year now.

Leslie Preston, an economist with TD Bank, noted that if you strip out volatile items like gasoline and mortgages, underlying inflation is still probably warm enough that the Bank of Canada is likely to think at least one more rate hike is warranted at some point.

Groceries are an interesting element in Canada and inflation in that segment does not appear to be controllable by the government or BoC. I definitely don't have insights or an understanding of the whole situation and industry but from what I have read recently there is too much consolidation in the industry and not enough competition. Because of that inflation is kept artificially high (ie. corporate greed is pushing up prices and margins.)

Food purchased from stores was up 9% while food purchased from restaurants was up 6.8%.

[opendoor]

Food inflation is basically a function of input costs inflation (energy, labor, etc.) but with a lag of 6 months or so. Because input cost inflation has dropped by about 50% in the last 7-8 months, food inflation will likely continue to drop as well:

https://twitter.com/user/status/1673701322019987457


That's only up to February, and inflation has dropped even more since then.

[Yoho]

https://twitter.com/user/status/1673833587353985024

[Azure]

Well yeah, gotta burn it to the ground.

Crash the market, so their the greedy corporate raiders can come in and buy the scraps for pennies on the dollar.

[PeteMoss]

Originally Posted by Azure

Well yeah, gotta burn it to the ground.

Crash the market, so their the greedy corporate raiders can come in and buy the scraps for pennies on the dollar.

Economy is booming eh..that's why they may potentially keep raising the rates.

Looking more and more like we may have the soft landing that is very hard to accomplish.

[DoubleK]

Originally Posted by Yoho

https://twitter.com/user/status/1673833587353985024

What's your point?

You literally post tweets and don't say anything.

So annoying.

[nik-]

Yoho is a doomer. Anything that makes things look worse he will post without comment.

[Yoho]

I like to see what experts are saying about it.

[nik-]

nah, it's the other thing

[Bring_Back_Shantz]

Originally Posted by Yoho

I like to see what experts are saying about it.

Ah yes.
Yoho, noted purveyor of "Expert" analysis.

[Yoho]

Originally Posted by DoubleK

What's your point?

You literally post tweets and don't say anything.

So annoying.

Was the “A hike still looks likely” in the title possibly the point?

[chemgear]

https://www.bnnbloomberg.ca/dockwork...tion-1.1940375

Dockworker Strike at Canada’s Biggest Ports to Fuel Inflation

A quarter of Canada’s total traded goods flow through these western ports, representing more than C$800 million ($604 million) worth of cargo each day. The disruption will have a knock-on effect to the rest of the economy, Robin Guy, vice president of the Canadian Chamber of Commerce, said in an interview.

While inflation has slowed, Canada’s economy regained momentum in May, potentially reinforcing the case for a July rate hike

[Moderator]

Originally Posted by Yoho

Was the “A hike still looks likely” in the title possibly the point?

If you are going to post a link to another website- please take a moment to add something to your post. Do you agree, disagree, etc. Make the post your own; as opposed to just reposting other party's links.

[flamesfever]

Originally Posted by Moderator

If you are going to post a link to another website- please take a moment to add something to your post. Do you agree, disagree, etc. Make the post your own; as opposed to just reposting other party's links.

In the case of Yoho, I would assume his opinion coincides with the link he is posting. Whether he tries to justify it further or not by commenting, I think his posts are adding to the thread...probably because a lot of the time I agree with him.

[Doctorfever]

Ya. There is like 20 posts per day with just a link, and no commentary.

It’s not unusual.

[flamesfever]

Also by not commenting, Yoho saves himself the effort to fend off the usual gang of one siders waiting to pounce.

[BlackArcher101]

Originally Posted by Doctorfever

Ya. There is like 20 posts per day with just a link, and no commentary.

It’s not unusual.

Literally the one right above the Mod post.