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Why Bank of Canada is in no rush to cut interest rates
May 24, 2023 | Posted by: Angela Robinson
Bank of Canada Governor Tiff Macklem emphasizes that interest rates won't quickly return to previous low levels. Higher rates increase consumer debt and pose risks to the financial system, but the transition to higher rates will take time.
Mortgage payments have risen due to recent rate hikes, impacting Canadians' financial freedom. Fixed-rate mortgages see up to 40% higher payments, while variable-rate mortgages experience a 25% increase.
The bank warns about potential loan defaults in a global recession, especially if house values drop significantly. Canadian institutions may tighten lending requirements if wholesale borrowing costs for big banks rise dramatically due to international financial crises.
Small enterprises face financial stress, with challenges in repaying government assistance grants. The bank is monitoring the development of cryptoassets but considers them currently low-risk.
The central bank remains determined to bring inflation back to its two percent target. The decision on interest rates will be based on the latest data received.
Get in touch with us today to stay informed about the evolving financial landscape! Call 780 701 3888 or email marc@albertamortgagepros.ca #BankofCanada #InterestRates #Mortgages #FinancialStability #Inflation #SmallBusinesses
Full article: https://www.wealthprofessional.ca/investments/fixed-income/why-bank-of-canada-is-in-no-rush-to-cut-interest-rates/376138
