Well, Governor Tiff Macklem was active last week addressing Inflation and the current Canadian Market in front of the Halifax Chamber of Commerce. Here’s a link to the speech, and a Q&A he hosted after if you want to watch it. He was also grilled by Global National Anchor, Dawna Friesen that same day. It’s a bit shorter, but the interview is to the point if you’re looking for a shorter watch.

My takeaways from it all:

• Look to the Core, Trim and Median Inflation numbers instead of overall CPI to determine where the overnight rate is going. BoC Governor Macklem noted that, “our core measures have yet to decline meaningfully even though total CPI inflation has come down in the last couple of months,” and that, “we will be watching our measures of core inflation closely for clear evidence of a turning point in underlying inflation.”
• Inventory/wholesale supply has increased, which means buying/demand has slowed and supply is catching up.  
• The BOC is just as worried about actual Inflation as expected Inflation. What this means is that if the general public believes Inflation will keep rising, they’ll expect higher wages, and if companies need to pay their staff more, then they’ll need to increase their costs to the public. This is called a wage/price spiral.

Also worth noting:

• Last week, the unemployment rate in Canada was 5.2% in September, down from 5.4% in the previous month, signalling that the Canadian labor market remains tight. The market saw the addition of approximately 21,000 jobs last month, with increases in both full-time and part-time work. Wage rates also increased by 5.2% annually, marking the fourth consecutive month of income gains above 5%.The strong employment sector will likely keep the Central Bank on path to increase the overnight rate on the 26^th.

In conclusion

During the Q&A, Tiff Macklem was asked about the probability of a recession. He said, “there is a path to a soft landing, but it is a narrow path, and there are risks, and you should be factoring those into your decisions.” This to me reads that a recession is on the way, and if that’s the case, rates will likely decrease. When the recession hits is anyone’s guess, as you could say we’re already in one as the definition of a recession is two consecutive quarters of decline in gross domestic product (GDP).

Markets are pricing in a .50% increase to the Prime rate on the 26^th, so be prepared for that. What that means for Adjustable rate mortgages – An $24/month increase for every $100,000 borrowed. Fixed rates are on the rise as Canada’s Bond Yield’s are now at a 14 year high after Tiff’s speech, so if you’re considering switching now may be the time.

As always, reach out to me if you have any questions. I’m here to help.