Some fear Bank of Canada Gov. Tiff Macklem is poised to raise rates again in July in a bid to drive inflation down to its target. ‘It’s two per cent or bust,’ says one economist.
What I don't understand is that we are in unprecedented economic times. So maybe the tools that corrected hyper inflation many decades ago isn't the answer here?
I think Singh has a better idea, start taxing excessive profits. Why does say Bell or Loblaws need billions in profits?
The annual inflation rate from 1971 to 1991 bounced between roughly 5% and 12%. It was only after BoC adopted the 2% target in the early 1990s that the inflation rate moderated.
My first car loan was through Chrysler, and 'discounted ' to 11% from the 13% bank rate. That was for a Dodge Colt 200E. No AC,, no cruise control, roll your own windows, no radio, no rear wiper, all for roughly $9500, almost $20K in today's money.
Mortgages peaked just over 20% in 1981. My first mortgage was close to 6% in the 1990s.
The "unprecedented" time was that period from roughly 1993 until prior to the pandemic of very low interest and inflation rates.
They don’t all measure inflation the same way. And with food inflation still being nearly 10% YoY, I highly doubt we’re using a decent measure to begin with.
What’s more, just because we’re less fucked than our neighbours doesn’t mean we still aren’t fucked. I’m not sure what’s with everyone using comparisons to others when there’s objective factors to look at.
Food only makes up roughly 10% of a median household's income ($68k after tax, 2.9 people). Even if food inflation is running at 10%, it's not a huge factor in affordability.
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