Bank of Canada Interest Rates — up again.
Piffle
So. I am not convinced that whaling away on the axle of the Canadian economy with the hammer of bank interest rates is the best way to influence global inflation. But, I don’t know enough. So, I wanted to read what Tiff Macklem (Governor of the Bank of Canada) has written about it, to see whether I think he knows his stuff or just knows how to use a hammer.
He has published zilch. Although he is the Dean of the University of Toronto’s Rotman School of Management, he has no publications with the University of Toronto’s press. Although he is an Alumnus of Queens University (where they are delighted to note that 3 of the last 4 governors of the Bank of Canada are Alumni of Queens) he has published nothing at McGill-Queens University Press. Chasing down articles he has written is futile because, enticing as the google leader might be, it usually turns out to be a journalist synopsizing yet another press conference. When I tried to find anything he might have published elsewhere by searching Indigo — it brought up works by Tsuyoshi Fujitaka.
So. That leaves us with two meagre sources:
The full text of his announcement speech:
https://www.bankofcanada.ca/2023/07/opening-statement-2023-07-12/
and the Governor’s Foreword of the Bank of Canada’s Annual Report 2022
https://www.bankofcanada.ca/publications/annual-reports-quarterly-financial-reports/annual-report-2022/
https://www.bankofcanada.ca/publications/annual-reports-quarterly-financial-reports/annual-report-2022/governors-foreword/
His biggest moan seems to be that people keep dipping into their savings to continue to afford housing.
And I just want to smack him with a big whack-a-mole sponge.
Every time interest rates go up, the cost of housing goes up either through increased mortgage payments, or increased rent payments to landlords with increased mortgage payments. Duh. If people *don’t* keep dipping into their savings (or lines of credit, or credit cards, or whatever), then they are out on the street. Do we measure how much of a percentage of the population is currently address-free? Is there a percentage goal where enough people are homeless that we can stop fooling with the interest rates?
After reading what meagre writing there is, I am convinced the only reason the Bank of Canada toys with the interest rates is because that is the only tool they have. They have no other mechanism for sticking a slat into the spokes of the economic bicycle.
A big spitty raspberry to people who think they can mow the lawn by trimming their bangs in the bathroom.
