Chad Moore Calgary Mortgage Broker

Hey Guys!

The Bank of Canada publishes “meeting deliberation notes” relating to the discussion of raising, lowering, or keeping interest rates the same.  

Here is a link to the Bank of Canada meeting notes.  Not to worry though!  I have a summary of the meeting deliberation below …

As a quick reminder …the Bank of Canada sets the key lending rate for our country.  Movements of the Bank of Canada interest rate changes the Prime rate at our commercial banks (RBC, TD etc).  And the Prime rate is linked to variable rate Mortgages. 

I find it helpful to know what the Bank of Canada is discussing in their meetings because their decisions trickle down into the economy we deal with everyday.

Bank of Canada “Hot Mic” Meeting Summary:

• Money Problems (GDP): A trade war would make less money for both Canada and the U.S. (I.E., lower gross domestic product (GDP)). Canada would have bigger problems because we trade a lot with the U.S. The money problems could stick around for a while. 
  
• Price Hikes: If Canada and other countries put taxes on stuff coming from the U.S., things could get more expensive. If prices go up, people might expect them to keep going up, which could cause even more price hikes.  I’ve written to you before about inflation (prices rising) partially being based on consumer expectations.  
  
• World Trade Troubles: A big trade war around the world could mean less demand for oil, which is something Canada sells a lot of. This could bring down prices, but also mean Canada makes less money.
  
• Money Value (Currency): Taxes (tariffs) on trade could make the Canadian dollar worth less. This could help Canadian stuff sell better, but also make things from other countries cost more.
  
• Long-Term Effects: Businesses might stop investing money, and people might take their money out of Canada. This would make it harder for Canada to be good at making things (productivity and exports). If the U.S. puts taxes on Canadian stuff, some businesses might close (job loss).
  
• What People Think: If things get more expensive because of trade taxes (tariffs), stores might quickly raise their prices. If people see prices going up, they might think prices will keep going up (inflation expectations).
  
• Government Help: The government could help people and businesses that are struggling. How much the spending helps depends on what the government does (I.E., fiscal deficit spending).
  
• What to Do: The Bank of Canada needs to think about whether to help the economy by making it easier to borrow money (lower rates), or if they need to worry about prices going up because of trade problems (inflation). It’s a tricky balance.
  
• Overall Plan: Canada’s central bank can’t stop all the bad things that might happen if there are permanent trade taxes. But, because they’ve already made borrowing money cheaper, they’re in a good spot to help smooth things over if there’s a trade problem.
  

Conclusion:

This Bank of Canada meeting resulted in lowering interest rates by 0.25%.

However, there is a great deal of discussion about the uncertainty of the economy moving forward.

A lot of this economic uncertainty is out of our direct control.  Honestly, we are subject to ebbs and flows of the economy.  

However, we can control the actions we can take.  If there is one thing I recommend everyone do is payout high interest personal debts.  

To some clients, I’ve recommended they use their savings to pay out debt.  I’ve recommended less spending, so people can pay out debt.  I’ve also helped people understand the benefit of consolidating debt with a refinance.

High interest debts …get them gone!!  Reach out if you want to discuss removing your debt. 

I hope this is helpful!

Talk soon,

Chad Moore

P.S.

I’m installing a wood stove in my house.  They are basically a stand alone firebox in the house.  I know.  It’s kind of odd.  The first idea was to build an actual fireplace to burn wood.  Then I discovered that was a rather significant build.  Then I thought about an electric fireplace.  And ultimately Emily and I landed on adding a wood stove.  

If you want me to share the many lessons I’ve been learning about shopping for a stove, installing the stove, getting inspections and insurance (I.E., all my failures) reach out!

I’ll have pictures of it on my IG.  Click follow while you’re there ;-).