As Biden Drives the Economy Into the Ground, Canadians Are Forecasting a Return Towards Normalcy

Number1411 /
Number1411 /

Despite a socialist-based economy, the people of Canada have been able to temper their inflation. With a more compact population density, fewer ports to clog up, and a healthy trucking system that stood up to PM Justin Trudeau over their rights, they haven’t felt inflation like the US. As such, they have been able to maintain a 4.5% interest rate. While they had raised interest rates eight times between March 2022 and February of this year, they have rebounded beautifully.

Peaking at over 8% in June 2022, by February of 2023 it got down to 5%, and per rumors for the March report that number is expected to be less than 4%. This allows the Bank of Canada to lower its own expectations for the rate. In response to the rumors, they have forecasted an official 3% interest rate by the middle of the year. This reasonable goal is also being set with a long-term expectation of 2% or better by the end of 2024.

Governor Tiff Macklem held a press conference following the news. “Getting inflation down to three percent this summer will be welcome relief for Canadians. But let me assure Canadians that we know our job is not done until we restore price stability. That’s the destination — we are on our way and we will stay the course.”

While the bank never fully shut the door on more rate hikes, they aren’t looking to make them a priority any time soon. From the data they are reporting, the economy has tempered itself enough to adjust its inflation.

Many Canadians found themselves previously choosing flexible rates for their mortgage. Some people in major metropolitans like Toronto report that, because of the interest hikes if their mortgage is forced to renew at the current rates, they could be paying $800 a month more for their home. These 3/5/10 year kinds of adaptable mortgages can be an absolute Godsend to people with poor credit ratings or who believe they can better time the economy down the line but don’t want to miss the house they want to make a home.

Inflation because of these types of mortgages was a massive reason for the housing bubble burst in the US in 2008. These poorly secured and set up mortgages destroyed many Americans and set them up at a tremendous disadvantage for being able to stay in their homes; homes that, had the numbers been run with real math, would have told mortgage underwriters they could never afford.

Now that people are getting ready for drops in rate quotes, the experts are already cautioning against that kind of speculation. “They are not going to be in a hurry to cut them when inflation is still above its target, and we see pressures that remain quite strong from the real side of the economy. It’s wishful thinking,” said economics Professor Brett House of the Columbia Business School in New York City.

As the goal of getting down to 2% is the major target for the Bank, House cautions people to mind that the Bank of Canada is looking carefully at the damage the previous rate hikes have already done to small businesses and homes that were forced into resigning at significantly higher rates recently. As he pointed out, these rates have deeply carved away at the disposable income many of these families have available.

This problem only becomes more complicated when you factor in how many Canadians lost their jobs during COVID. Plus, those who were forced to take less when they were pushed remote.

For what it’s worth, Biden hasn’t taken a single step like this. Instead, he has only continued to push more government programs the taxpayers cannot afford to help “raise the bottom” while sinking the middle class. This socialist playbook he has used is not unlike Trudeau’s edition. However, the Canadian leader has a more up-to-date edition.