Bank of Canada raises overnight rate
The Bank of Canada today increased its target for the overnight rate to 1 per cent. The Bank Rate is correspondingly 1 per cent and the deposit rate is 1 per cent.
The Bank expects the global economy to grow by about 3 per cent in 2018 and 3 per cent in 2019, in line with the April Monetary Policy Report (MPR). The US economy is proving stronger than expected, reinforcing market expectations of higher policy rates and pushing up the US dollar. This is contributing to financial stresses in some emerging market economies. Meanwhile, oil prices have risen. Yet, the Canadian dollar is lower, reflecting broad-based US dollar strength and concerns about trade actions. The possibility of more trade protectionism is the most important threat to global prospects.
Canadas economy continues to operate close to its capacity and the composition of growth is shifting. Temporary factors are causing volatility in quarterly growth rates: the Bank projects a pick-up to 2.8 per cent in the second quarter and a moderation to 1.5 per cent in the third. Household spending is being dampened by higher interest rates and tighter mortgage lending guidelines. Recent data suggest housing markets are beginning to stabilize following a weak start to 2018. Meanwhile, exports are being buoyed by strong global demand and higher commodity prices. Business investment is growing in response to solid demand growth and capacity pressures, although trade tensions are weighing on investment in some sectors. Overall, the Bank still expects average growth of close to 2 per cent over 2018-2020.
CPI and the Banks core measures of inflation remain near 2 per cent, consistent with an economy operating close to capacity. CPI inflation is expected to edge up further to about 2.5 per cent before settling back to 2 per cent by the second half of 2019.
Article from BankOfCanada.ca
Eat together to create healthy habits for your kids
Meals can be an important social outlet, whether its lunchtime in the cafeteria with coworkers to take your mind off the job or reconnecting with the family at Sunday dinner. But the benefits of eating together reach well beyond social interaction.
Families who eat together eat better, so its no wonder that Health Canada recommends sharing meals with friends and family whenever possible.
Karolina Otto, a registered dietitian with Real Canadian Superstore, shares a few of the best reasons to spend more time together around the table eating.
Culture.Eating with family helps pass on food traditions. Expanding your food repertoire is an excellent way to try new things and experience other cultures first-hand.
Social.Eating together fosters social connections. A paper from the Vanier Institute of the Family suggests that family meals are associated with benefits for youth, spanning mental health and literacy.
Nutrition.Eating as a family is tied to healthier weight and superior food choices among children kids who eat dinner with their families also have more fruit and veggies and less unhealthy foods. Meal time with friends may also expand kids horizons since food choices are heavily influenced by role models like peers and parents.
Security.Regular meal times provide reassurance for kids. Knowing theyll have breakfast or dinner at home is one less thing for them to stress out about in the morning or after a long day at school.
Learn more and speak to your local dietitian at www.bookadietitian.ca.
Government Policy is Hurting Affordability
For years a headline story has been the increasing level of personal debt, which has now reached $1.70 for every dollar of disposable income. The latest numbers show that Canadians have $1.53 trillion in mortgage debt. For many rising mortgage rates will be a problem.
In April, a MNP survey found that 25% of Canadian mortgage holders were already feeling the strain of higher rates. This is consistent with an IPSOS survey done in October after the first two interest rate hikes. At that time 42% of respondents said they couldnt afford an additional $200 a month in expenses with 70% saying they were already curtailing their spending.
The latest increase in rates will mean more than $200 in extra monthly expenses for a good percentage of mortgage holders when they renew. Thats on top of higher gas prices, increased carbon taxes in BC and Alberta, higher car insurance rates in BC, property tax increases in every major urban centre and other mandatory cost increases from governments across the country.
A significant number of mortgage holders will be forced to cut back discretionary spending, including retail, the auto sector and restaurants. This is one reason that the Bank of Canadas forecasts economic growth to slow to 1.9% this year and hit only 1.5% in 2019.
The impact of higher mortgage rates will extend far beyond first time buyers given that 47% of Canadian mortgages have to be renewed in the next 12 months. Only 22% of current mortgages are for 3 years or longer, which means that 78% of Canadian mortgages must be refinanced and it will be at higher rates.
For more information about your mortgage and how these changes will impact you, contact me.