Inflation rate creeped up in April | General financial discussion | Discussion forum

Maybe but I doubt it. HISA rates in the chart here (with Motive as an outlier) are already well below yields currently paid by Money Market mutual funds, Cash ETFs and brokerage ISAs, most of which are in the 4.5-4.8% range currently. It is these latter vehicles that would see a boost from a BoC rate increase. Remember that HISA rates are only as competitive as is necessary to attract the level of deposits any given FI needs.

A major contributor to the higher April inflation number was higher mortgage interest rates upon renewal and runaway rent increases. Without the housing component, inflation would have been, I seem to recall, 3.7% rather than 4.4%. The 'pig' continues to move through the 'python' methodically.

The sub-components of CPI provide the sector indicators. Spend some time with those on a month-to-month comparison over the past 12 months to get the trend lines for each of the components. Goods inflation is indeed moderating. Services is not, nor obviously is the housing component.

Food and energy have always been volatile components subject to a lot of seasonal and geo-political vagaries not responsive to, or manageable by, individual central banker monetary policy. That is why BoC et al look at the CPI with and without those components (as I would too).

House prices (and rent) are impacted more by housing demand (immigration -- population growth) and lack of a proper government housing policy to encourage supply than anything else. Our national government has failed miserably at coordinating harmonized housing and immigration policies.

The Rock said

Higher savings rates could be on the way. It may not be possible to get inflation to the 2% target without further rate hikes.  

If only

I wouldn't bet the farm on that ⬆ ... or even a small haystack.

BoC interest rates are but only a 'Part' of what drives SA & GIC rates. When you consider all the moving parts together, SA & GIC rates will continue to slowly go south, regardless of the BoC's next move(s).

My Two Centavos,

Dean

Was reading an article many economists believe the BOC will raise rate .25 June 7th ,hopefully raising GIC and HISA rates. Gee I wish I had a crystal ball, have a few big GIC's coming due on the 5th. I also have some coming due early next year where the rate in my mind was disgusting ,however that was the best at the time 1.95%

Real HISA rates are still negative except promotions. And thats an aberration. This is typical early on in the tightening cycle but normally corrects over time.

Large banks in particular are supposed to get more competitive later on in the cycle, at least thats what I recall. Of course this cycle may play out differently, who knows?