Another Interest Rate Hike Is Coming:

In September the Bank of Canada increased the overnight rate by 75bps to 3.25%. At that point in time Canadians had been subjected to five consecutive rate hikes in a single year and borrowing money was the most expensive it has been since 2008. Now economists predict a 75-base point job this Wednesday, October 26th, marking a momumental sixth consecutive increase.

But what does this all mean...

Global News has this to say:

"...although inflation has been slowing in recent months thanks to tumbling gas prices, the central bank has made it clear it doesn’t believe its job is done just yet.

“Simply put, there is more to be done,” Bank of Canada governor Tiff Macklem said during a speech in Halifax on Oct. 6.

As the Bank of Canada raises interest rates to bring inflation back to its two per cent target, officials at the central bank have expressed concern about how high inflation still is and its impact on consumer and business expectations for future inflation."

CTV News talks to Gary Rabbior:

Gary Rabbior of the Canadian Foundation for Economic Education to dissect how another interest rate hike could affect the daily lives of all Canadians. Outlining the cyclical nature of the economy, who will be most affected...and who may have something to benifit. And could there be a lesson buried in all of this?

NDP Leader Jagmeet Singh has a warning for all Canadians about tomorrow's rate hike:

"In a letter to the Prime Minister, the NDP Leader pushes for immediate action to reduce negative impacts of the upcoming interest rate hike on Canadians

 'Our country is currently faced with a cost-of-living crisis, with food prices at a 40 year high. And while families across the country are having to make hard decisions about their family budgets, some in this country are doing just fine and actually profiting from inflation," said Singh. "One might say that everyone suffers from inflation – but they surely don’t suffer equally. Right now, big corporations’ profits are going up twice as fast as inflation. And workers’ wages aren’t keeping up. Yet, for the last 6 months, the Liberal government has spent more time congratulating itself and finding excuses not to act to fight inflation. This is wrong.'

In his letter, Singh laid out concrete measures that the Liberals should include in their upcoming Fall Economic statement to ensure people aren’t left to fend for themselves in these difficult times."

The Toronto Star warns about rising backlash:

"Jim Stanford, an economist and director of the Centre for Future Work, said a recession is likely if the Bank of Canada continues to move forcefully on interest rates, because if history is any guide, it happens every time the central bank moves rates too quickly.

In the early ’80s and early ’90s the Bank of Canada’s drastic rates hikes resulted in two painful recessions, he said.

“Is it worth it to have a recession to get inflation down?” asked Stanford. “The Bank of Canada should be more gradual and targeted in its approach.” "

The Globe And Mail says banks warn clients about variable-mortgage trigger rate, signalling higher payments ahead:

"Banks are contacting many clients with variable mortgages to inform them that they’re reaching their trigger rate, signalling higher monthly costs for a growing number of homeowners and a longer payback period.

Soaring interest rates are punishing homeowners with variable mortgages, which had been popular in recent years because of their previously low rates.

The vast majority of Canadian variable mortgages have fixed payments, meaning that payments stay the same even as interest rates rise moderately. Instead of a payment increase, the portion of your payment that goes toward interest changes, as does your amortization period."

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