Wealth Awesome Newsletter

Hey there,

It was a bit of a sleepy summer for financial news, which is why I haven't been emailing much. 

But there has been some news recently. On September 6, the Bank of Canada decided to hold their key interest rate at 5.00%.

For those keeping score, since April 13, 2022, here's what the BoC actions have been: 

Times the rates were raised:June 1, 2022: +0.50%July 13, 2022: +1.00%September 7, 2022: +0.75%October 26, 2022: +0.50%December 7, 2022: +0.50%January 25, 2023: +0.25%June 7, 2023: +0.25%July 12, 2023: +0.25%

Total times rates were raised: 8 times

Times the rates were held:April 13, 2022: No changeMarch 8, 2023: No changeApril 12, 2023: No changeSeptember 6, 2023: No change

Total times rates were held: 4 times

My analysis:

Over the course of roughly a year and a half (from April 13, 2022, to September 6, 2023), the target rate increased by 4.00%, from 1.00% to 5.00%.The frequency of rate hikes, especially from June 1, 2022, to September 7, 2022, indicates the rapid tightening of monetary policy during this period. The main reason was to control inflation.After January 25, 2023, the rate of increase slowed down, with only three more hikes throughout the year and a total increase of just 0.75%.The multiple times rates were held (4 times) indicates periods of "wait-and-see" by the BoC.

It's tough to say what the BoC will do for next, but it's possible that rates can finally start coming down or stay in a holding pattern.

Some good news: Even though the BoC held interest rates, EQ Bank increased their 1-Year GIC interest rate from 5.50% to 5.75%. Again, I'm annoyed because I bought a bunch of GICs when it was 5.25%. Anyways, you can apply for the 5.75% rate here.

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Regards,
Christopher Liew, CFA
Creator of Wealth Awesome
Website: Wealthawesome.com