The Goldilocks Economy - MMC035

<p>This week's episode is all about how the economy maintains good order and balance. On Wednesday, the Bank of Canada increased the overnight rate from 0.25% to 0.50%, the first rate increase since 2018. How does this impact inflation? How does it impact the Canadian people? Have a listen to the episode to find out!</p> <p>Here is what you can take away from this episode:</p> <p>1. Will this rate hike solve our inflation problems? Probably not.</p> <p>When interest rates increase, the impact that has on an economy isn't realized for 12 - 18 months. Consumers were so tight for cash during COVID though, and many of them still are, that this was not a possibility last year. The Bank of Canada will spend the next few years hiking interest rates at a steady clip to see where the proper balance is of fighting inflation fears vs. those of a bear market.</p> <p>2. Energy policy has a huge effect on foreign policy.</p> <p>Energy is a valuable resource. Every country has a vested interest in it's cost and accessibility. Some countries are mass producers of energy, while others rely on importing it to keep their economy afloat. When inflation leads to a skyrocketing cost of energy, countries pay attention.</p> <p>3. We STILL love the variable rate.</p> <p>The fixed rate has been pumped up by talks of 6, maybe even 8 interest rate hikes in 2022, so if the year continues and we find we aren't on pace to reach those marks, the fixed rate should come back down a bit. The variable rate is still at such a huge discount to prime, so we feel that if you are okay with taking a bit of risk, the variable rate looks really good. </p> <p>0:00 - Intro 1:18 - Marcus’ shirt 4:03 - Bank of Canada increased interest rates this week by 25 bps, the Federal Reserve in the US may do so shortly. 6:02 - Is inflation a result of shipping companies increasing costs during Covid? 8:23 - Increasing the overnight rate won’t help fight our rapidly increasing costs, only takes more out of people’s wallets. 10:37 - Energy policy affects foreign p