Link: https://archive.ph/6Tuku
The problem we're going to run into is that interest rates are the only real tool the bank has to control inflation. And the idea there is to force people to spend less and for businesses to spend less. That increases supply and reduces prices in theory. Basically you're taking money out of the economy to slow it down.
BUT - the trudeau gov't is still spending excessively. Which means more money gets dumped into the economy. That's in direct opposition to the BOC's actions. And that reduces their effect on inflation reduction.
So the bank is going to have to keep up with significant rate increases just to tip the scales back. And that guaranteed is going to move us into a recession. I would tend to agree we won't see it till second quarter next year but i think it's going to be deeper and longer than people think.
The problem we're going to run into is that interest rates are the only real tool the bank has to control inflation. And the idea there is to force people to spend less and for businesses to spend less. That increases supply and reduces prices in theory. Basically you're taking money out of the economy to slow it down.
BUT - the trudeau gov't is still spending excessively. Which means more money gets dumped into the economy. That's in direct opposition to the BOC's actions. And that reduces their effect on inflation reduction.
So the bank is going to have to keep up with significant rate increases just to tip the scales back. And that guaranteed is going to move us into a recession. I would tend to agree we won't see it till second quarter next year but i think it's going to be deeper and longer than people think.