![]() ![]() 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. When inflation leads to a skyrocketing cost of energy, countries pay attention. Some countries are mass producers of energy, while others rely on importing it to keep their economy afloat. Every country has a vested interest in it’s cost and accessibility. Energy policy has a huge effect on foreign policy.Įnergy is a valuable resource. 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. Consumers were so tight for cash during COVID though, and many of them still are, that this was not a possibility last year. When interest rates increase, the impact that has on an economy isn’t realized for 12 – 18 months. Will this rate hike solve our inflation problems? Probably not. Here is what you can take away from this episode: 1. How does this impact inflation? How does it impact the Canadian people? Have a listen to the episode to find out! On Wednesday, the Bank of Canada increased the overnight rate from 0.25% to 0.50%, the first rate increase since 2018. ![]() ![]() Not too hot and not too cold.Īnd, more importantly, they keep the Fed and the bears on the sideline.This week’s episode is all about how the economy maintains good order and balance. In doing so, they prevent the economy from overheating. We know the Fed is concerned about an overheating economy, and these short episodes of COVID seem to tamp the brakes on hiring. In a weird twist, these short bursts of COVID might be doing the Fed’s work. There was a similar situation in December and January when the monthly payroll number dropped from its trend:Įventually, COVID cases started declining, and payroll growth picked up again. The seven-day average of 164,000 is nearing the peak reached in January. COVID cases have been on the rise since early July. It was also the weakest month since January.īut the weak jobs number should have been expected. There was a sharp slowdown in hiring from July, which was revised to 1.1 million from 943,000 added payrolls. However, these aren’t normal times, and this isn’t a normal market. In a normal environment, investors might be worried about a forthcoming economic slowdown. businesses created only one-third of the jobs expected. The S&P 500 closed the day flat while still up 0.5% for the week. If you read that, you might have dumped all your stocks. Of course, this was in large font and boldface type. One, in particular, proclaimed: “August jobs report badly missed expectations with 235,000 payroll gain as the Delta wave slams hiring.” I checked the financial news headlines after the report, and it looked bad on the surface. It would also keep the stock market bears at bay.įriday’s unemployment report, while less than economists expected, suggests Goldilocks might have found the perfect temperature for stocks… This Isn’t a Normal Market This ideal Goldilocks state would keep the Federal Reserve on the sidelines, allowing it to keep rates lower for longer. #A goldilocks economy softwareThe stock market was in the middle of an unprecedented boom because new technology like PCs and software had rapidly increased economic productivity. The term was first used by an unnamed government official in 1996. Under these Goldilock’s conditions, the market tends to stay in a bullish uptrend. Not too hot to cause inflation and not too cold to cause a slowdown in growth. The term describes an ideal state for an economic system. This is stolen from the line in the popular children’s story where Goldilocks describes the best temperature of porridge. A Goldilocks economy is not too hot and not too cold. ![]()
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |