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.

  • Prezhotnuts@kbin.social
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    1 year ago

    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?

    • Sir_Osis_of_Liver@kbin.social
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      1 year ago

      Unprecedented times? Hardly.

      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.

      • Kelsenellenelvial@lemmy.ca
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        1 year ago

        That’s fair, but it’s not the whole story. Fact is things were more affordable then, particularly for people in entry-level type jobs making near minimum wage. Look at things like median wage vs median cost of housing, and you see a very different storey, even with high interest rates.

    • Sir_Osis_of_Liver@kbin.social
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      1 year ago

      Food only makes up roughly 10% of a median household’s income ($68k, 2.9 people). Even if food inflation is running at 10%, it’s not a huge factor in affordability.

      • Kelsenellenelvial@lemmy.ca
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        1 year ago

        That median household income doesn’t go very far these days. It’s only manageable for many because they get support from family/friends or have a big chunk of unreported income that doesn’t meet the statistics. I’m looking at changing careers and the idea of our household income dropping to only a little above that median is scary as hell. An increase of 10% of 10% of one’s budget doesn’t sound crazy on its own, but when lots of other costs are going up too good might be one of the highest $ value changes compared to things like fuel or individual utility costs.