Interest-Rate Increases Depend on Future Investments

Tiff Macklem, Governor of the Bank of Canada stated that the future of interest rates heavily relies upon whether or not Canada’s businesses boost investments while the economy emerges from the Covid-19 pandemic.

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While raising borrowing costs, Macklem stated that he would “act deliberately and communicate clearly”, but proceeded to add that businesses have a significant role when it comes to the nature of the process.

“Productivity growth is vital to non-inflationary growth and rising standards of living. At a time when inflation is already well above our target, this is more vital than ever.” – Macklem stated during his speech to the Canadian Chamber of Commerce.” The current annual role of the Canadian market is $111 billion.

During a press conference after Macklem’s speech, he stated that the Bank of Canada will not be letting this one fix on its own, but rather gather policymakers who will delve deeper into the adequacy of the policy settings. The bottom line, according to the Governor is that the fewer investments there are, the higher the interest rate will go.

The policy decision to raise borrowing costs in order to cool inflation was made on January 26th by the Bank of Canada. The markets are currently awaiting the next decision by the Bank of Canada, which is expected to be publicly released on March 2nd.

 

ABOUT AUTHOR

Despite her formal background in linguistics, Maja has always been fascinated by the world of finance. She has spent years and years analyzing the market, including trades, investments, pitfalls to avoid as well as the stock exchange. As of recent, she has been studying some non-mainstream stocks in Canada. When I’m not immersed in numbers, I like to spend time with my dog and plan my next trip.

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