Get ready for interest rates to start their upward journey.
There is a growing consensus that higher rates are inevitable and, in this country, probably sooner rather than later. Some of the major banks are suggesting as early as next month but early in 2022 for sure.
Explaining why rates are going to rise is quite simple actually. It’s all about inflation, the scourge that undermines purchasing power by making everything more expensive. And the primary weapon for inflation-fighting is a higher interest rate.
And we have inflation because of government spending. You simply can’t print that much money – money used to prime the pump during COVID and even before the pandemic – without an expectation of inflation. More money makes it less valuable so we spend more of it to get what we want – like Toronto where the average house is now $1.5 million.
$1.5 million just doesn’t buy what it used to so the Bank of Canada, and other central banks around the world, has decided to stop printing money and raise interest rates instead to put the lid on inflation.
