The pivot

Whoa, little beavs. Did we just see a pivot?

The Bank of Canada raised rates this morning, but less than anticipated – a halfer instead of 75 bps. That alone was big news, since Mr. Market had baked in a stiffer jolt of CB meds. This is also less than the expected Fed jump, which comes in the first few days of November.

But wait. The lower-than-awful rate hike also came with a big dose of dovishness from Tiffer and the gang. Check out this news, straight from the bankers’ mouths…

  • No recession in the US – “The Bank projects no growth in the US economy through most of next year.” Nothing about a contraction.
  • Rate hikes so far are working – “The effects of recent policy rate increases by the Bank are becoming evident in interest-sensitive areas of the economy: housing activity has retreated sharply, and spending by households and businesses is softening. Also, the slowdown in international demand is beginning to weigh on exports.”
  • No recession in Canada – “The Bank projects GDP growth will slow from 3¼% this year to just under 1% next year and 2% in 2024.”
  • Inflation is being crushed – “In the last three months, CPI inflation has declined from 8.1% to 6.9%, primarily due to a fall in gasoline prices.”
  • This will all be over next year – “CPI inflation is projected to move down to about 3% by the end of 2023, and then return to the 2% target by the end of 2024.”

Yeah, the bank says, we’re not done quite yet. “The Governing Council expects that the policy interest rate will need to rise further.” But those (maybe) rate hikes will be data-dependent, “influenced by our assessments of how tighter monetary policy is working to slow demand, how supply challenges are resolving, and how inflation and inflation expectations are responding.”

This is yuge. And it comes amid solid evidence that only a few months of rate hikes have pretty much smashed the real estate market in many places. Just look at new home sales in the GTA. Incredible. In that giant and dense region sales of new houses have collapsed 96% year/year (only 334 units) while new condo deals are down an equally-astonishing 89% (just 289).

Now, look at what happened in the bond market in the few minutes following the BoC’s bombshell blast…

Look out below! Bond yield craters

The yield on the key five-year Government of Canada bond collapsed more than 5% – a massive move – immediately upon the announcement. Bond prices spiked. It made those investors who started loading up on debt in the last few days look like geniuses. Or maybe they just read this blog, where we said that Whiffs of a Pivot were in the air lately – making an historic bond sell-off look immensely overdone.

What’s it mean?

Well, only a day ago the country’s mainline economists were saying stuff like this: “Hot Canadian Inflation and Why Macklem Has No Choice But To Hike 75bps Next Week.” Now the guys in Ottawa are telling us the cost of living will collapse from almost 7% to just 3% in a year and down to 2% after that. No recession, the bank adds. Real estate is plunging as planned, and the verbiage around more rate hikes has been made soother than a Harry Styles costume change.

Bay Street jumped over 200 points on the news. Mortgage lenders huddled to see if a few basis points could quickly be shaved off five-year rates. The news of a potential monetary policy pivot shot through the Twittersphere – although there’s no hint rates will drop any time soon. Just pause, maybe. But that’s enough.

The danger in this?

That the BoC is being bullied by political pressure into an early retreat, that inflation could surge if rates languish, that homebuyers and stock investors start to recklessly party again, and we go through this pain again too soon.

Let’s hope the central bankers know what they’re doing. After all, there’s a track record…

About the picture: “Hi Garth. Can’t remember when I wasn’t a follower of your blog,” writes Rick. “This is Lexi, my daughter and son in law’s coon hound. She has been riding on my side by side since she was a few months old . They live outside London on a small farm . The beans are real in the background . I have her on a leash as she would be on the trail in minutes!”

157 comments ↓

#1 Brian Kenney on 10.26.22 at 10:58 am

I always considered the Feds to be driving via the rear view mirror given delayed economic data being shown to them, if they managed to finish the obstacle course without any more mistakes doing so will be impressive

#2 Ole Doberman on 10.26.22 at 11:01 am

I hope Putin is reading your blog, and decides not to nuke and disturb the recovery.

#3 Drill Baby Drill on 10.26.22 at 11:04 am

“That the BoC is being bullied by political pressure into an early retreat”
That is exactly what is happening.

#4 Ponzius Pilatus on 10.26.22 at 11:07 am

Yeah,
Let’s hope that the BOC don’t act like the “Fool in the Shower”.

#5 Shawn on 10.26.22 at 11:08 am

Doff the tinfoil hats…

The all-clear signal has been given.

#6 Robert Ash on 10.26.22 at 11:14 am

Wouldn’t it be grand if we, as a North American Economy, returned to normal metrics, and principles of Financial Measurement based on Generally Accepted accounting principles. Wonderful, and then if the Investment community started to focus on Value benchmarks, like Good balance sheets, Innovative management, R&D, Market Development, etc. Music to many ears, to hear…That company has a great product, and plans, to market same! Then governments, gets a wake up call, to operate, conservatively.

#7 crowdedelevatorfartz on 10.26.22 at 11:14 am

A pivot already?
I’m not that optimistic.
0.50% is much much too small.
This is just like the CERB hand outs.
Too soon.
Too easy.
Foolish.
Smells of political pressure.
All because “gas prices are down? and it lowers the CPI?
Delusional.
Food is still too expensive.
Unemployment is still too low.
Russia and China can drop a hand grenade in the economic outhouse at any time.
Utter foolishness.
Time for Mr Inflation come roaring back and to take the BoC mandarins out behind the woodshed and paddle their butts..

#8 another tinpot7 economist on 10.26.22 at 11:14 am

Garth for Bank of Canada Governor

First?

#9 Ponzius Pilatus on 10.26.22 at 11:17 am

First there was Inflation. Now it’s What Inflation?
Then there was Recession. Now it’s What Recession?
Are the Roaring 20s back on?

#10 Wrk.dover on 10.26.22 at 11:17 am

Colonel I know nothing Shultz was a banker in disguise.

#11 Regg on 10.26.22 at 11:17 am

Short term victory it seems today but longer term pain is on the way, inflation, cost of living, taxes, poverty up, up, up.

#12 Linda on 10.26.22 at 11:20 am

Quel surprise! Of course the BoC did make that full 1 point increase earlier in the year. That plus the contraction in official inflation gave sufficient breathing room to allow for a lower than anticipated increase. Of course, that also allows them the room to increase rates by another .50 come December should inflation begin to creep upwards again.

Regardless, as per the article I read on BNN, the BoC anticipates inflation will be around 6.9% for the 2022 year. There was also mention of inflation of 0.6% as pertains to mortgages over the 2023 & 2024 calendar years.

#13 Kootenay Dave on 10.26.22 at 11:20 am

Garth, did you write this article? “Big dose of dovishness” (?)… I interpreted the statement as remaining hawkish, but perhaps slightly less hawkish. “Inflation being crushed due to a drop in gasoline prices” (?)… kind of contradicts your article last week and the reality we’re all seeing at the pump right now. We’ll see what the fed does next week I suppose.

#14 IHCTD9 on 10.26.22 at 11:23 am

Nice pup and SXS. I prefer YAMAHA, but Honda is ok too.

#15 Jennifer on 10.26.22 at 11:26 am

3.75% is peanuts with inflation going to be minimum 4% to 5%+ for the next few years. Good thing we retired and can live off our CPP, OAS, pay all our income taxes, property taxes etc. and have a $5,000 buffer.

The rest of our RRSPs, TFSAs, cash accounts etc. are all piling up $40,000 a year with no ups and downs and other surprises.

#16 Bill zufelt on 10.26.22 at 11:26 am

Real gamble here. All the bluster of getting tough and they lay off the gas already? 3.75 % is still way behind the curve and with food inflation at 11.5% this is pretty stupid. OAS and CPP and other supports will be going up 6.3% in January not to mention what teachers etc will get. Can you say ENTRENCHMENT? They were getting some credibility back but you have to hit 5% before even thinking of slowing down.

#17 Rook on 10.26.22 at 11:28 am

Mightn’t this cause a real estate bounce, though? “Oh, good. Less than anticipated, so we’re near the bottom, better get a mortgage now before the next hike”?

#18 Quintilian on 10.26.22 at 11:29 am

That the BoC is being bullied by political pressure into an early retreat

Garth, is that a typo?

Or did you pivot?

Central Bankers, possibly influenced by politics, ….please say it isn’t so.

#19 Ponzius Pilatus on 10.26.22 at 11:31 am

Even though gas prices are down, the message still is:
Drive less, get a smaller ride.
Even if you have an EV.
In the long term, energy prices will only go Uppa.

#20 SunShowers on 10.26.22 at 11:32 am

#148 Shawn on 10.26.22 at 10:45 am
#146 SunShowers on 10.26.22 at 10:22 am

Why is being dependent on the government any worse than being dependent on a private corporation? I can at least vote for who represents me in government, I can’t vote out my boss if I don’t like them.

***************************************
“Sad that you don’t even think of “being dependent on yourself”. Your future is largely up to you.”

Because nobody who isn’t independently wealthy is “dependent on themselves”, and anyone who thinks they are is lying to themselves.

#21 the Jaguar on 10.26.22 at 11:35 am

Maybe they see one of the major drivers of current inflation coming to an end (?). Note there is currently an initiative to seize versus freeze, similar to a smash and grab. Not all endings result in new beginnings or mended fences though, but the bumbling and stumbling continues.
One must exercise patience.

#22 Josh on 10.26.22 at 11:53 am

My cousin and sister in law’s mortgage just came up for renewal today. They have 40% equity in the house and now with $540,000 mortgage the best rate they could get for 5 years is 5.17% versus 2.67% before. I think he said there extra payment is $1,565 more a month now. There other expenses, cost of living are up another $500 a month. They were at least prudent in saving a bunch of money the last 10 years but now looks like they will have to cut their RRSP, TFSA, investment contributions by 50%. Alot of people are worse off will be in real trouble.

#23 The Gorn on 10.26.22 at 11:54 am

DELETED

#24 Concerned Citizen on 10.26.22 at 12:00 pm

When is the last time a central banker predicted a recession?

This is great news for asset holders, as it signals that – as many of us in the steerage section long predicted – that the Tiffster will continue the bank’s long-standing policy of bailing out speculators (and encouraging further speculation) by keeping real rates highly negative. There is nothing remotely restrictive in today’s monetary policy, and the Tiffster surely knows as much. The last thing he will do is encourage responsible and sustainable finance by getting real rates to 0% – or heaven forbid, even positive.

So be prepared kiddos. Those home prices that are back to late 2021 levels and still 30% higher than a couple years ago? They’re about to surge big time again. You and your 19 basement roommates had better get that multimillion dollar crack shack down by the river before one of the Tiffster’s bailed out speculators leverages his 50th property to buy it.

What a sinking ship, ruled by utterly incompetent clowns. I can’t say I didn’t see it coming a mile away – my commodity plays are doing exceedingly well today as more monetary madness is signalled ahead.

#25 Kris on 10.26.22 at 12:00 pm

Never put it past them to make the wrong decision and postpone pain. They will always kick the ball down the road.

Welcome to Canada. Where we eat our future generations.

Disgusting and shameful. They know full well there is zero chance in hell that inflation is anywhere near getting under control. They just preserve themselves and the current political party at all costs. Cost being that the kids are literally being eaten by their stupid parents.

I used to say Canadians were fairly smart. Boy was I wrong. This country is a POS

#26 Ponzius Pilatus on 10.26.22 at 12:05 pm

We all (including rich people) are connected and inter-dependent.
“Don’t send to ask for Whom the Bells toll,
They toll for thee”.
You can’t play Pickle Ball by yourself.
I’m sure Don G. Would agree.

#27 Robert B on 10.26.22 at 12:05 pm

Not so fast Tiff…….oil will be a major problem for you next year. The macro conditions for oil will result in higher oil prices.
Think about it, a stronger economy means more oil consumption………I feel a storm coming

#28 Billy on 10.26.22 at 12:14 pm

Hedging (and self preservation) pure and simple. If the US CB goes another 75 basis points, we’ll be back in line. And if they surprise with only 50, we’re on par.

#29 IHCTD9 on 10.26.22 at 12:24 pm

BOC might be in the right if the numbers do show CPI and spending collapsing. I’d rather a rough soft landing than a pile drive into the dirt. If the US Fed is also a little less aggressive with their next hike, then the BOC probably did the right thing lightening up a tad. I assume the big CB poohbah’s are talking to each other. Biggest thing is not to go bonkers with emergency rates if trouble looms for the economy in the future.

Still obviously a long road ahead.

#30 Sean on 10.26.22 at 12:25 pm

Well, well, well…

Few others (sorry I can’t remember their names) and myself have been saying for at least a year: they have no choice but to inflate with negative real rates.

I don’t believe those latest projections either.

Business is slow everywhere and now that Republicans will gain in the mid-terms there will less chance to pass insane spending plans to artificially postpone recession.

The Fed will have no choice but to start some sort of QE in Q1/Q2 of 2023. If they don’t, the rest of the world will continue to suffer from QT caused by the expensive US dollar.

No QE is coming next year. – Garth

#31 thebarold on 10.26.22 at 12:28 pm

What will the bond market do on Monday – I think this was a surprise in the short term but once they weigh this against the evidence, I am willing to bet they underclubbed this one and are kicking it down to the December meeting.

#32 Ponzius Pilatus on 10.26.22 at 12:28 pm

#26 Robert B on 10.26.22 at 12:05 pm
Not so fast Tiff…….oil will be a major problem for you next year. The macro conditions for oil will result in higher oil prices.
Think about it, a stronger economy means more oil consumption………I feel a storm coming
—————————-
Well, the Saudis under their new leader, are punching way above their weight.
The focus is on China and Russia.
But OPEC could throw a curve ball.
Another 70’s boycott coming?
In any case, lessen your dependence on oil.

#33 Independent on 10.26.22 at 12:42 pm

SunShowers (should be renamed ‘clouds follow me everywhere’):

“Because nobody who isn’t independently wealthy is “dependent on themselves”, and anyone who thinks they are is lying to themselves.”

***************************************

People who have no skills that anyone would ever want to pay for are dependent like SunShowers.

But with even a little effort the vast majority (95% is the usual estimate) make themselves useful, some more than others.

The true independent person has skills that they can hire out or use in their own business. No ‘inheritance’ or ‘independent wealth’ necessary.

The skills I am using now I taught myself over a period of 2 or 3 years. A couple of courses and some hands on work experience and then on my own.

The fact that you need to be productive in some way does not mean you are not independent. The idea that you can only be considered independent if food falls from the sky while you lie on a sofa catching it with your open mouth could only come from a gloomster.

The perennial gloomsters think work is slavery so you can’t ever get them to agree that being productive is incredibly satisfying and even necessary for most people’s mental well being.

That’s fine. We independents go on living our happy, fulfilled, productive lives while the gloomsters sit around depressed and anxious because they can’t figure out how being good at something, anything, is the only way to live.

Independence means if I don’t like my job I can find another or make my own, which I have done, several times.

I have no need to work any more but will do so until I die because it is so rewarding.

Can’t imagine what it must be like to think of yourself as a ‘wage slave.’ What a horrible attitude to go through life with.

#34 Gone For A Long Long While on 10.26.22 at 12:42 pm

When Jagmeet speaks the BoC listens. LOL, this country is doomed for decades.

#35 Henry on 10.26.22 at 12:46 pm

We went from QE to QT to now a just getting started period QF, Quantitative Inflation. The days of cheap interest rates, low interest rates, negative nominal interest rates are over. We will see many rental properties on the market for many months, maybe years, condos probably more than houses like back in the 90’s. Alot of people will be facing soon $1,000 to $2,000 monthly increases at already current rates with their mortgage payments. I just heard on Zoomer radio a caller saying the big jump in the mortgage payments from their rental property from $2,300 to $3,500 a month also if they would be able to get a 20%+ rental increase to charge their tenants when last year only a 2.4% rental increase was allowed by the provincial government. The chances of that happening was very unlikely as a possibility.

We now have tax hungry mayors with new, higher property taxes, fees, new taxes even way before the pandemic, current higher inflation plus energy crunch, higher energy, food, materials supply price spikes, shortages so really it is going to get really ugly for many years.

#36 Joseph R. on 10.26.22 at 12:57 pm

“That the BoC is being bullied by political pressure into an early retreat, that inflation could surge if rates languish, that homebuyers and stock investors start to recklessly party again, and we go through this pain again too soon

Let’s hope the central bankers know what they’re doing”

One concern that the FED and the BoC (to a lesser degree) may have is sovereign debt in developing countries and the risk of defaults due to increasing rates.

The FED also has to account for the rising price of the Greenback compared to most developing countries’ national currencies.

Doing a “pause” may very well allow governments to reexamine their term of repayments through their Treasury bill and notes for the short term; and, therefore prevent defaults.

#37 Jason on 10.26.22 at 1:00 pm

The CBs and Governments went overboard with low rates and fiscal stimulus during COVID, and need a sharp increase to course correct. Moving to more moderate hiking seems to be in order in my mind, given inflation has rolled over, and real estate sales have been decimated. People have to remember that anything over a 0.25% raise is considered oversized, and we’ve seen hikes of 1.00% and multiple hikes of 0.75% already this year. Moving to a more reasonable 0.25% hike at the end of this year, and likely at the beginning of next year is going to calm things down. Not a bad plan if one were hoping for a soft landing.

#38 Honest Realtor on 10.26.22 at 1:01 pm

The crash projected by all those doomsayers is becoming a ghost.

Don’t miss out. People who wisely buy in solid areas now will be delighted with the results in 2, 10, 15 years and more.

Have a balanced and diversified real estate portfolio and don’t sell in panic.

#39 alexinvestor on 10.26.22 at 1:11 pm

Central bankers have generally always been influenced by politics. After all, central bankers are appointed by the government which could fall if JS decides so. We will see what happens Nov 2 … CAD might get decimated.

#40 Balmuto on 10.26.22 at 1:19 pm

“This will all be over next year.”

Famous last words. I’d love to see the robust statistical model that delivered a projection of 3% next year and 2% the following. Looks very goal-seeked. “Don’t worry – it will be just over our target next year, and then right back to target the year after. And no, it won’t overshoot to the downside either, we’ve taken care of that. You want Goldilocks – you got it!”

And then when reality ends up looking totally different from projection – well, it was just a projection, wasn’t it?

#41 kommykim on 10.26.22 at 1:23 pm

0.5% is ridiculous. It seems like these guys don’t know what they are doing.
Or worse: They know exactly what they are doing and are letting inflation run just hot enough to inflate away some debt but not so hot that the inflation rate increases. I think this might be a sneaky way to raise the inflation rate target without actually saying so.

#42 Palpha on 10.26.22 at 1:27 pm

I don’t think BOC is in a hurry to get inflation under control. With 6% inflation Government’s collect 6% more in taxes too. Suddenly we are running surpluses! But at some point government debt also has to be paid off at higher rates. That’s when the sh.. hits the fan

#43 Concerned Citizen on 10.26.22 at 1:29 pm

The Fed will have no choice but to start some sort of QE in Q1/Q2 of 2023. If they don’t, the rest of the world will continue to suffer from QT caused by the expensive US dollar.

No QE is coming next year. – Garth

*****

Have you studied Jerome Powell’s track record in the big chair?

I’d take that bet.

#44 Søren Angst on 10.26.22 at 1:29 pm

Whimps.

Cdns will end up paying for it.

But hey, what do I care. I’m retired, raking in divs, life is good.

Garth, I smell political interference. Tell me what you want but it’s so. Pivot my buttocks. Trudeau scared dungless at wealth loss and net income loss.

—————

Energy will zap up after US Midterms and so will inflation.

Enjoy the reprieve Canada.

As for me, off to Venezia tomorrow for a passeggiata, worry free 1 hr Frecciarossa train ride.

Eat your hearts out Igloo/Ark Dwellers (you will, at the till and the bank).

#45 Brett in Calgary on 10.26.22 at 1:31 pm

The best buys are always when it feels wrong. Lucky me picking up some VLB and TLT the other day. I am still no bull when it comes to stocks though, I’ll continue to hold my inverse ETF on S&P until some of that excess is flushed out. “No growth” – that’s an understatement.

#46 Søren Angst on 10.26.22 at 1:41 pm

Political interference.

You betcha.

Garth the consummate Paleo and me on my own Paleo both saying it.

Garth’s hidden * and my greys for the World to see, say so.

Consumer Spending surging, Cdns whining effectively (but lying thru their teeth) and Trudeau scared out of his wits at Household Wealth Loss and 40% of Cdns bleeding take home income =

BoC wimping out.

It is going to get ugly inflation wise post US Midterms. Mark my words.

* Let the bullets fly My Liege.

#47 Adam on 10.26.22 at 1:44 pm

What about core inflation? That’s the true metric. Food costs up 11%. This is clearly a case of the BoC being manipulated by government, which, if true, is very bad news because the BoC is not following it’s own mandate then.

#48 Søren Angst on 10.26.22 at 1:45 pm

Prior Comments,

Human me.

Investor me looking at his stuff surging today …

Boo-yah!

#49 XEQT and chill on 10.26.22 at 1:47 pm

Once the USA runs out of their strategic oil supply, won’t gas prices go back up, and inflation pop again? Guess we’ll see.

#50 Islanddave on 10.26.22 at 1:50 pm

Six or seven months ago… 50 basis point was big news. Now, modest… hmmm
Fortunately I don’t personally have large debts but many do, thankful my personal situation is as low stress as it is

#51 TalkingPie on 10.26.22 at 1:56 pm

I’m not a finance guy by any stretch of the imagination, but I’m not seeing what’s to get so excited about here. Looking at my portfolio, which has gone up by less than a percent today, the market seems to agree, at least for now.

Given how much rates have climbed in the last six months and the fact that they seem to be starting to have an effect, it sounds reasonable to me that the BoC has tempered its rate hikes. Better to do that now, and wait and see whether to raise them more in the coming months, than to overdo it now and then have to walk back rates later. Let’s put this into perspective: we’re talking about raising rates less, not lowering them or even stopping the upward trend.

It’s been said that there’s up to a three month delay for rate hikes to have its full effect on the real estate market, given mortgage rate holds, so being cautious at this point makes sense to me.

Central banks around the world may have overreacted in slashing rates during the pandemic, but I don’t see how overreacting in the other direction now would be good for anyone.

#52 Søren Angst on 10.26.22 at 2:00 pm

Boo-yah Europa!

To all you little DOOMSDAY Prophets about Winter in Europa and nat gas …

Europe now has so much natural gas that prices just dipped below zero
https://edition.cnn.com/2022/10/26/energy/europe-natural-gas-prices-plunge/index.html

Mangiami.

And to add accident to insult from the Mountain Hovel Bankers …

Switzerland is experiencing the warmest October since measurements began
https://www.20min.ch/story/die-schweiz-erlebt-den-waermsten-oktober-seit-messbeginn-321265138096

Of course, Italia is as warm as ever. 23 deg C in NE Italia (Pordenone). Mid to high 20s in the South and Central Italia. 28 deg in Palermo & Reggio di Calabria. 26 in Roma. No end in sight this week.

Sorry (sarcasm) about that Igloo/Ark Dwellers. Not called Sunny Italy for nothing.

May wear shorts tomorrow to Venezia …

#53 Brian on 10.26.22 at 2:03 pm

The Bank of Canada surprised the markets this morning by raising interest rates by 50bps, rather than the anticipated 75bs, indicating that more rate hikes will be needed to cool down Canada’s inflation rate.
How many More to Come?

https://www.youtube.com/watch?v=1JugdJBcDBg

#54 Dr V on 10.26.22 at 2:05 pm

In other more important news, MS and google reported weaker earnings. S&P has just slipped into red….

Dont get too excited about a 0.5% hike by the BOC.

Maybe Tiff knows exactly what he is doing…..maybe…

#55 Richard L on 10.26.22 at 2:07 pm

Macklem has wimped out. There is no way inflation has been tamed. Most unfortunate.

#56 Prairieboy43 on 10.26.22 at 2:12 pm

I view the BOC management similar to Austin Powers movie. Canadians just witnessed the Dr. hit the Easy Button.
PB43

#57 Søren Angst on 10.26.22 at 2:23 pm

Boo-yah Canada 🍁!

A lot of pretty pictures today from StatCan (and some Stats).

Immigrants make up the largest share of the population in over 150 years and continue to shape who we are as Canadians
https://www150.statcan.gc.ca/n1/daily-quotidien/221026/dq221026a-eng.htm?HPA=1

On a sad note, no Immigrant Love for (ignore the StatCan Title spin, read the map %’s in Green):

Sask., Man. & Eastern Canada
https://www150.statcan.gc.ca/n1/daily-quotidien/221026/mc-a001-eng.htm

And, a shapely demographic figure she has …
https://www150.statcan.gc.ca/n1/daily-quotidien/221026/g-a002-eng.htm

#58 Wait There on 10.26.22 at 2:24 pm

When I see food prices stabilize then I will believe.
I noticed a false narrative being played out here. Even when inflation SLOWS food prices will still be rising. The 11% touted is rubbish in the real world. One used to regularly get bread on sale, bread is hardly on sale anymore. The real rise is a lot more than “list” price.

Eggs are the same. I used to buy eggs on sale on weekends. Now eggs are also hardly on sale. When it does go on sale. They’re all gone and I have to buy at regular price. Nearly double what I used to pay.

Soy drink, oatmeal drink has gone up 20-25%.

Gas will rise by 13 cents in two days….just after the rate announcement. Hmm………… just enough to keep people happy.

As for housing policy, pretty soon we will have additional suites in front of everybody’s house in the suburbs. I mean many garages have 400-600 square feet……as much as a condo. There is a slippery slope. Then we will have parking situations like Vancouver where residential streets are unpassable because you pack so many residents in one household and they park their cars on the street. We need stacked parking on streets! Elon Musk where are you here.

#59 Dr V on 10.26.22 at 2:36 pm

51 Pie

“Given how much rates have climbed in the last six months and the fact that they seem to be starting to have an effect, it sounds reasonable to me that the BoC has tempered its rate hikes. Better to do that now, and wait and see whether to raise them more in the coming months, than to overdo it now and then have to walk back rates later. Let’s put this into perspective: we’re talking about raising rates less, not lowering them or even stopping the upward trend.”
————————————————-

A well worded summary.

#60 Okotoksmatt on 10.26.22 at 2:48 pm

Tiff Macklem and the BofC were the lasts ones in Canada to realize inflation was transitionary. They seem to be flying blind here but have no choice on interest rates. Too bad Freeland/Trudeau don’t cut spending as their high spending/ deficits are also inflationary. Many young families are getting hurt with the fast interest hikes.

#61 jack on 10.26.22 at 2:52 pm

so new home inventory is building. Does that mean that they weren’t sold pre-construction? That’s doubtful, so it means buyers aren’t qualifying or are backing out of contracts.

#62 Doug in London on 10.26.22 at 2:53 pm

What’s happening now is not new. It was the correct response to high inflation in 1981, and again in 1990, and it worked. It will work again this time around. Oh sure, there will be collateral damage, like those fools who bought way more house than they could afford during lower interest rates and outrageously high prices but whose fault is that?

It reminds me of a video I saw of a long freight train bombing along at 100 Km per hour or more and went into emergency braking. It didn’t stop on a dime, but it did stop surprisingly fast for all that weight. Similarly, these higher interest rates WILL snuff out inflation.

#63 Leftover on 10.26.22 at 2:54 pm

Just as the first 25 bps increase didn’t really deserve the “crisis” billing that it got, neither does this slightly lower then predicted increase mark much of anything dramatic. It’s still 50 bps, above the norm.

Our guys are playing wait & see what happens when the Fed makes its next move in a couple of weeks. We are the tail of the dog after all.

CB’s on both sides of the border want neutral rates, something in the 2.5 to 3% range, with 2% inflation. A positive real rate and a normal yield curve. That’ll happen over the next year. The Fed doesn’t want to be an election issue in 2024 and I doubt it will be.

#64 BitcoinBro on 10.26.22 at 3:00 pm

“Inflation is being crushed – “In the last three months, CPI inflation has declined from 8.1% to 6.9%, primarily due to a fall in gasoline prices” “

Oil will be up at $100 again soon and all this “crushing” will be undone. The stuff people actually need to buy to live (food, fuel, shelter) continues to get more expensive… fuel prices back at spring levels are not going to help.

This is politics. The BoC want to say they tried their darnedest to be nice to the drowning Canadian consumer. What they will do over the winter if/when CPI jacks back up is now interesting. If they chickened out now, what if the economy tanks harder than they imagined over the next few quarters?

Western central banks giving up on fighting inflation and/or changing the target is definitely on the spectrum of outcomes here. At the end of the day our politicians, Bay Street, Wall Street, etc. want to return to easy money, easy credit policy as soon as possible. They don’t actually care about the cost of living crisis.

#65 Old Boot on 10.26.22 at 3:03 pm

#59 Dr V on 10.26.22 at 2:36 pm

51 Pie

“Given how much rates have climbed in the last six months and the fact that they seem to be starting to have an effect, it sounds reasonable to me that the BoC has tempered its rate hikes. Better to do that now, and wait and see whether to raise them more in the coming months, than to overdo it now and then have to walk back rates later. Let’s put this into perspective: we’re talking about raising rates less, not lowering them or even stopping the upward trend.”
————————————————-

A well worded summary.

————-

Agree on both counts.

#66 HateTiff on 10.26.22 at 3:11 pm

I knew it! Inflation is retreating and will soon be in the rear view. I knew that sucker would realize the truth sooner rather than later. Next rate hike? 50bp? 25bp? nah, probably 0bp. Over and done with! Raise middle finger at TM.

#67 under the radar on 10.26.22 at 3:18 pm

Pivot- changing direction. No pivot here, not even a pause.

#68 DER on 10.26.22 at 3:18 pm

Should we be surprised by this?…Tiff already has shown his true colours by resisting raising for too long in 2021. However, will be interesting to see what the US does soon…perhaps they had planned on doing less and someone from the Federal Reserve whispered in his ear. Big election soon.

#69 Dorry on 10.26.22 at 3:24 pm

We need 15 years of normal or average interest rates to undo the crap they created the last 15 years. Interest rates need to be on the higher side for the next 5 years at least, 5% Bank of Canada rate and 7% to 8% mortgage rates, 5% to 6% GIC rates.

Only after this we can have lower interest rates for the many remaining years, 3.5% to 4% Bank of Canada rate, 5% to 5.75% mortgage rates, 3.75% to 4.5% GIC rates. If we go back to very low interest rates, the next time the pain will be more and longer felt. The piper needs to be paid for many years.

#70 Dave on 10.26.22 at 3:35 pm

The world runs on diesel….ships trucks and some cars.

Diesel is 58 cents more then gas. $2.40 per liter

That’s inflation

#71 Habsfan60 on 10.26.22 at 3:43 pm

More observations from a GTA Renter.

A friend on facebook, who is angry alot, complained that she just renewed her variable mortgage to obscene rates. “How can people afford it” was her wail of anguish. One of her connected friends remarked that their own mortgage had increased $800 per month and they don’t know what they can cut back to pay for it.

The blood is starting to appear in the streets

#72 Reed on 10.26.22 at 3:53 pm

Dave, what this Trudeau, Singh Liberals, NDP, Democrats and other left, socialists have in store is higher, much higher gas, diesel, natural gas, propane, electricity and many other fuel prices to double in the next few years. Do not forget how this impacts food and other general goods, services inflation. It is their main goal and they hide behind misleading people saying it is for our own good. When they say that watch out.

#73 Richard on 10.26.22 at 4:02 pm

This is what housing advocates wanted.

#74 Gurdeep Singh on 10.26.22 at 4:09 pm

Garth can you delete #23 for posting an anti-immigrant link.

As a small mom and pop landlord, and realtor full time, I welcome newcomers to this great country of ours.

No need for xenophobia and blaming immigration. Canada needs immigrants. Plain and simple.

#75 I don't know on 10.26.22 at 4:25 pm

Kudos to the Bank of Canada for reading the room, ignoring the emotional blubbering going on, and making the right move.

They always have the ability to hike later on (if need be) anyways.

But our host is absolutely correct. Inflation is being crushed (wait until the year/year in 2023 when CPI is negative).

Central banks talk tough in regards to inflation, but they don’t really mind it. Deflation is the real enemy. They will pause the moment they need to and reverse course as they see fit. We aren’t going to see 2021 interest rates for a while, but this aint the 80’s by a long shot.

Sitting in depreciating cash (junk) waiting for Godot? Now is a good time to buy what you can while it’s on sale.

IDK

#76 Ponnaps on 10.26.22 at 4:27 pm

All this means is 50 bps in Dec..

#77 The Original Jake on 10.26.22 at 4:28 pm

“Never fight the FED” (and BoC by default) but the FED is also notorious for making mistakes. Wonder if today’s 1/2 bsp move was the latter and not enough since most of the inflation drop is coming from the pump where prices could skyrocket again in a moment with Putin pulling the strings.

#78 SunShowers on 10.26.22 at 4:29 pm

#33 Independent on 10.26.22 at 12:42 pm
“Independence means I get to choose who I’m dependent on.”

#79 cuke and tomato pickere on 10.26.22 at 4:29 pm

Yes Tiff was little soft today but this is our Canada we always go along in a gentle caring way and maybe it’s for the greater good because a .75 rate increase may be too much of a shock. The too little too late may just be prolonging the agony. We are not ready to face reality yet.

#80 Nonplused on 10.26.22 at 4:34 pm

Well, predicting a decline in inflation due to declining gasoline prices seems a little premature to me. Winter is coming.

Also, since when did they include energy in the baseline CPI? Or is that only when it goes down?

Anyway also in the news is a new dental benefit and a low income renter relief bonus expected to cost $703 and $940 million each. It didn’t say whether that was “per year” or “NPV”. Somebody needs to explain to Trudeau that subsidizing expenses does not reduce inflation, and borrowing to do so increases inflation. But I don’t think he cares.

It seems to me that western governments have all but given up on controlling inflation, and are now focusing on “cost of living” measures, a.k.a. subsidizing major expenses like energy and now rent and dental care. This will not decrease inflation. Dental care for all children under 12 sounds like a pretty good idea to me, but having the government pay for it with borrowed money has to be inflationary. It means more demand, so dentists are going to charge more. Then they will take that more money and spend it. And since the benefit is not matched by a tax increase to offset it, more money must be borrowed into existence. The cost of everything else will thus go up.

Too bad there is no such thing as a free lunch. Otherwise why stop at dental care? Why not free Teslas for the underprivileged? Right after we give them all a free house with a free garage to charge it in for free.

As for the inflation forecasts, I call the over on that. First, note no deflation is in the forecast so that means prices are expected to in the very best case scenario continue up at 2% from wherever they finish their current run. They ain’t coming back down. You should have bought all the things. But second, I’ll believe 2% when I see it. All it probably means is that a little birdie told Tiff that the US Fed was only going to go 0.5% this time due to the midterm elections.

Folks, Russian Oil and Gas is still offline. It will remain so until the west agrees that the Russian speaking eastern Ukraine will never be under Kiev’s control again. Whether that means independence or as part of the Russian federation doesn’t really matter. And then even once that is settled, it will take some time to turn the gas back on. That means Europe is screwed for the foreseeable future. Not only will they be sucking every GJ of energy out of the west that they can afford, but they won’t be producing much in the way of goods either. It is highly inflationary. A big part of the world’s GDP is going to be negative for some time to come.

Analogies aren’t a good way to argue, but consider this one: This winter is going to look sort of like the great toilet paper crisis of 2020, only energy. The stage we are at right now, it’s no big deal that Costco doesn’t have any TP, you can just stop at Safeway on the way home. But we are about to find out that they don’t have any either. That’s when it’ll start to sink in.

And no, pinwheels won’t save us. To make up for lost Russian supply, we would have to take all the wind and solar there is in the world right now, double it, double it again, and then double it yet again. Maybe that is possible but it will take at least a decade. And that’s just to get back to where we are right now, it allows for no growth. And it will be highly inflationary. Not only will it suck up all the steel and copper, but then you end up with expensive and intermittent power. Still need a gas plant on standby. Or mythical batteries.

#81 Rogerhomeinspector on 10.26.22 at 4:36 pm

For all the bravado of late regarding the BOC’s independence, I feel there’s an often forgotten entity that has tremendous influence over BOC’s policy.

The US FED.

They couldn’t give two licks about what’s happening in Canada and our failure to follow their lead means we import inflation. Bad move today- we’re going to be playing catch-up again very soon.

#82 I don't know on 10.26.22 at 4:36 pm

#71 Habsfan60 on 10.26.22 at 3:43 pm

Most people will cut out everything they possibly can or re-amortize at a longer duration to keep payments low if they have to. Even in the 80’s and early 90’s, default rates were low. We aren’t the US and this is not 2008.

Looks like Facebook, or any social media really, isn’t a good representation of reality after all.

IDK

#83 Saint Herb on 10.26.22 at 4:47 pm

I really wanted it to be 75bps. House prices need to drop more. As soon as people see the pressure off they will figure out the absolute maximum they can afford and start buying again.

This was suppose to be the last nail in the coffin of real estate.

#84 SW on 10.26.22 at 4:53 pm

The caveat if risk returns in a meaningful way, the $USD will continue to get dumped then stuff priced in $USD rallies (commodities), which is inflationary. Not to mention we are on a cusp of a major energy crisis. In the 70’s it was localized to the US and they could source energy elsewhere but now it’s global. This will take years to fix from what I read.

Not too sure why it took 10 years to get inflation under control last time and why our CB thinks it will be tamed in just a few years? Do they have a magic wand?

Regardless, I don’t ask questions, just go with what is trending and it’s not tech stocks!

#85 Søren Angst on 10.26.22 at 5:00 pm

CHIEF TWIT
https://twitter.com/elonmusk

Delaware Chancery Court HANGING CHANCELLOR Kathaleen McCormick set a deadline of October 28 for Tesla CEO Elon Musk to make good on his promise to buy Twitter.

The judge ended up postponing the original trial set for last week and gave the parties until the end of this week to close to deal, or else she would set new trial dates for November.

Told you all so.

Big mouth, tough Elon schooled by Kathaleen … you know, like a puppy running away after getting startled

Yap yap yap yap yap yap yap

TWTR $53.35 +0.97% +0.51 Today
Closed: Oct 26, 4:58:48 PM UTC-4 · USD · NYSE

#86 NoName on 10.26.22 at 5:02 pm

@52 spaghetti agnolotti

Now that i am posting less often it seems that some resemblances of some normalcy is somewhat restored below deck, except sometimes. Where, sometimes is perhaps to frequent, anyways.

Here is my question for you. Other day you sad something or posted a link to consumers spending yo stats web, and i looked. (not one where you showed dips in spending in winter) It was interesting to see, but.
Is it possible that because of inflation consumers are spending more more on goods and services and in reality they are actually consuming less in real terms.

For example my energy needs/consumption (food/fuel/interior thermal comfort) is relatively steady and predictable didn’t changed much, so in terms of jules its flat line or even went down we bumped thermostat up this summer. But in a terms dollars there is let’s say very noticable difference now vs last year, and now vs spring/summer. I even give up on few online subscription and Tim’s, but there are other reasons in play there also. So what brings me to the question, is there a table where it shows same, but in a good and services sold/rendered terms? Because i believe dollar amount could be bit off because of inflation.

As for your trip to Venecija you know its beginning of rainy season, may i sagest to bring ribber boots and inflatable gondola for just in case, and lets hope weather this year will cooperate.

And on a side note did you catch that gas over there went negative two or days ago?
https://twitter.com/AndreasSteno/status/1584510752773181440

#87 Victor Llearna on 10.26.22 at 5:04 pm

Soon the canadian dollar will be like the peso.

The $100 Canadian bill will become the new looney.

Monthly OAS payments might buy a starbucks coffee

#88 canuck on 10.26.22 at 5:12 pm

Anyone who thinks there won’t be a recession in 2023 is delusional, plain and simple.

It’s time to pay for the insanity of the last couple of years.

#89 KuatoLives on 10.26.22 at 5:16 pm

Most people are bad at their jobs.

#90 earthboundmisfit on 10.26.22 at 5:24 pm

So …. the Hammer now has a champagne socialist mayor and a municipal council stacked with social workers. This is not going to end well. Regrettably, the timing is bad for getting outta Dodge.

#91 Robert B on 10.26.22 at 5:30 pm

#32 Ponzius Pilatus on 10.26.22 at 12:28 pm
Well, the Saudis under their new leader, are punching way above their weight.
The focus is on China and Russia.
But OPEC could throw a curve ball.
Another 70’s boycott coming?
In any case, lessen your dependence on oil.

———————————————————
There is a move to Green…..no better way than to bring the price of oil up to make the transition happen to electric…..
But high oil prices is only helping Russia continue their assault on Ukraine. Talk about backfire…..
Why else would there be a shortgage of diesel fuel in the USA? They want us off OIL….

But oil equities are great for your portfolio.

#92 IHCTD9 on 10.26.22 at 5:31 pm

#72 Reed on 10.26.22 at 3:53 pm
Dave, what this Trudeau, Singh Liberals, NDP, Democrats and other left, socialists have in store is higher, much higher gas, diesel, natural gas, propane, electricity and many other fuel prices to double in the next few years
——-

IIRC, Singh didn’t want higher fossil fuel prices, he wanted to outright BAN fossil fuels.

I couldn’t even type that without laughing :)

#93 chalkie on 10.26.22 at 5:59 pm

When our unemployment rate goes from 3 ¼ % to 3 ¾%, it only affects ½ % of the unemployed in Canada, but when the BOC rate goes from 3 ¼ % to 3 ¾% it affects the entire Canadian population.

Over the coming months, our biggest trading partner, the United States will minimize imports from Canada to protect their own and Canada’s GDP shortfall will play a big part and eventually tie the noose around the economy pushing it into recession with little chance of beating the inflationary targets.

Quote of the day: Life is a succession of lessons which must be lived to be understood.

#94 Fasa on 10.26.22 at 6:13 pm

Energy is slowly treading upwards again (winter is coming) and food is still sitting at 11% higher so I expect a .50 BPS hike in December to offset not going full out now. If the US goes .75 BPS I guess my golf to trip to Florida is off since the CDN dollar is going to get crushed.

#95 Ballingsford on 10.26.22 at 6:26 pm

Recovery in the works. Glad I held the course and didn’t sell anything, thanks Garth! I’m richer than I think. Not really, still feeling quite a bit poorer than a year ago.

I also think BOC is being too optimistic.

#96 PBrasseur on 10.26.22 at 6:27 pm

Pivot! What a relief!!!!

Turns out we CAN run an entire economy from government spending and on buying ever more expensive houses from each other.

Who would have thought?

#97 Graeme on 10.26.22 at 6:39 pm

They don’t know what they’re doing.

There were those who believed rates would not rise. They were wrong. There were blog authors who believed rates would rise (partly correct)

This is the beginning of Act II in “They can never rase rates but they will try anyway, then fail”

and chicken-out counts as “fail” :)

#98 Don Guillermo on 10.26.22 at 6:42 pm

#87 Victor Llearna on 10.26.22 at 5:04 pm
Soon the canadian dollar will be like the peso.

$_$_$_$_$_$_

CAD has lost roughly 15% to the Mex Peso in the past year. Lots of fresh produce comes from Méhíko (as Ponzi would say).

#99 Mad Vlad on 10.26.22 at 6:52 pm

DELETED (Abusive)

#100 ogdoad on 10.26.22 at 7:00 pm

So much talk about rates and inflation and how doomed recent home owners are (full. dis. unless you keep, don’t get divorced, like the place you live and stay away from any source of media – you’re good!….but in the short term…you lost big time…sorry)…wait, that’s NO ONE. Hmmmm, duped, anyone?

….oh ya! Heard in the recent news that almost 25% of Canada is made up of immigrants! So much for nationalism eh, Canada? Why? B/c it shouldn’t even exist. Those of you who are turning your noses up at immigrants (which, unfortunately, is a lot of YOU – especially in Kelowna and Leslieville) gotta wake up…wars are still happening, climate is still changing, population is still growing…so what? You don’t accept, you’re gonna lose (it’ll hurt,too)…oh, and your kids are gonna marry and have kids, right…with whom? How will Thanks-Giving 2035 look? The HORROR!

Then….you’ll die…

Anywho, I have trick that I do to relieve some of the feeling of being robbed that a lot of you are going to experience in your life time…it involves bending over…then realizing that its a unwinnable fight…then a hug. I’m really good! Disappointment? Not an option.

Og

#101 bald and sweaty on 10.26.22 at 7:26 pm

Garth.. speaking of bonds, floating rate ones were a way to hedge inflation (I think you even had some in your portfolios), but it didn’t quite work out that way. Take MFT, down 10.2% YTD. What happened with those?

#102 I have 3 kids on 10.26.22 at 7:28 pm

“ In the last three months, CPI inflation has declined from 8.1% to 6.9%, primarily due to a fall in gasoline prices.”

If inflation is being ‘crushed’ by a fall in gasoline prices, what happens when gas prices go up? (Which it will) thanks to our ever increasing carbon tax, not to mention supply and deman metrics.

That statement is a joke. Gasoline price decreases are not a stable event.
But it leaves Tiff an out.
When inflation rips again, he will say “ oh it’s because of skyrocketing energy prices” and recant his points made today.

It would be sad if it weren’t so pathetic.
Grow a pair

#103 Just someone on 10.26.22 at 7:31 pm

Had to come here today to read the well-deserved castigation of the BoC for caving today… Delaying the inevitable pain, and dragging out the corrections underway.

#104 dosouth on 10.26.22 at 7:33 pm

You have hit the nail on the head……

Political interference, but hey, someone here voted for these “representatives of the people”

This will not end well and you should mark this date on your calendar of recalls to when you referenced this….just sayin’

#105 @Gurdeep Singh..listen to Russel on 10.26.22 at 7:40 pm

DELETED (Racist)

#106 Ponzius Pilatus on 10.26.22 at 7:49 pm

#98 Don Guillermo on 10.26.22 at 6:42 pm
#87 Victor Llearna on 10.26.22 at 5:04 pm
Soon the canadian dollar will be like the peso.

$_$_$_$_$_$_

CAD has lost roughly 15% to the Mex Peso in the past year. Lots of fresh produce comes from Méhíko (as Ponzi would say).
————–
But somehow Avocados are cheaper here than a few month ago.
Too much supply?

#107 Doug t on 10.26.22 at 7:50 pm

The proverbial can has taken a beating being kicked down the never ending road since 2008 – time to pay the piper and the piper wants his due

#108 Regjeg on 10.26.22 at 7:53 pm

Tiff decided not to risk a tiff with CF just ahead of her mid-year release. Hence the narrative that sunshine and ponies are on the horizon.

#109 4 out of 3 people find math hard on 10.26.22 at 8:26 pm

85: Elon walked into Twitter Headquarters today laughing carrying a sink. A walking pun: “Let that sink in”. I don’t think he felt he was “schooled”

#110 NoName on 10.26.22 at 8:32 pm

#106 Ponzius Pilatus on 10.26.22 at 7:49 pm
#98 Don Guillermo on 10.26.22 at 6:42 pm
#87 Victor Llearna on 10.26.22 at 5:04 pm
Soon the canadian dollar will be like the peso.

$_$_$_$_$_$_

CAD has lost roughly 15% to the Mex Peso in the past year. Lots of fresh produce comes from Méhíko (as Ponzi would say).
————–
But somehow Avocados are cheaper here than a few month ago.
Too much supply?

Not enough demand, maybe?

#111 Old Boot on 10.26.22 at 8:35 pm

Ah, Schadenfreude.

A realtor who went variable at the market peak.

https://www.cbc.ca/news/canada/british-columbia/interest-rate-hike-blow-to-b-c-homeowners-1.6629552

#112 Don Guillermo on 10.26.22 at 8:42 pm

106 Ponzius Pilatus on 10.26.22 at 7:49 pm
#98 Don Guillermo on 10.26.22 at 6:42 pm
#87 Victor Llearna on 10.26.22 at 5:04 pm
Soon the canadian dollar will be like the peso.

$_$_$_$_$_$_

CAD has lost roughly 15% to the Mex Peso in the past year. Lots of fresh produce comes from Méhíko (as Ponzi would say).
————–
But somehow Avocados are cheaper here than a few month ago.
Too much supply?
$$$$$$
I must have smuggled too many back in my suitcase. :-(

#113 AACI Homedog on 10.26.22 at 8:43 pm

Re #13 kootenay dave

Things change man…sometimes even for the better.
A lot can happen in a week.
As some on here say…try to keep up.

#114 Mattl on 10.26.22 at 8:56 pm

If the economy could survive normalized rates and zero QE the BOC wouldn’t have been stimulating the economy the past decade. They know this, hence the caving in today.

And Singh lobbying for the BOC to back off is insane, so much for being a man of the people – inflation hurts lower incomes the most. Talk about losing the plot.

#115 THE DANDADA on 10.26.22 at 9:11 pm

The Bank of Canada (chickened out) and only raised interest rates by 50 basis points, instead of the 75 basis points markets had expected.

The price of winning a fight against inflation is too high for most central banks to pay, especially the Fed.

Inflation won, consumers lost!

#116 Al on 10.26.22 at 9:14 pm

“Now the guys in Ottawa are telling us the cost of living will collapse from almost 7% to just 3% in a year and down to 2% after that. No recession, the bank adds. ”

And we know how reliable their predictions are lol. Take it with a bucket of salt.

#117 Quintilian on 10.26.22 at 9:18 pm

Inflation is insidious.
Eraticating it would require double digit rates: or you can tame it by a combination of higher rates and stratagem.

Economics obviously has a numbers component, but it is not the whole story and the calculator operators can never understand it through the lens from which they view the world.
It lacks depth of field.

Tiff knows it; he is a schooled man. He understands the psychology of the schizophrenic Mr. Market and the laughable pitchmen who power the swings.

Today he made the point that they can guess about his moves, but ultimately, he will decide.

And I think he has decided not to listen to Mr. Market’s supplicants.

So, economists and pumpers can expound on what they expect, but it seems, that although, J Powell and T Macklem cannot ignore politics completely, they won’t succumb to it to the degree that most recent CB’s have.

The Greenspan Put is dead, live with it gamblers.

#118 Shawn on 10.26.22 at 9:37 pm

The massive “Single Family Home Belt” that surrounds the down town of Cities in Ontario is about to be kaput. And that’s a good thing. Knock ’em down and build muti-family. Imagine living in a City and protesting tall buildings.

#119 Mad Vlad on 10.26.22 at 9:42 pm

#111 Old Boot

The realtor drank his own koolaid. They are so far down the rabbit hole that they can’t see daylight.

#120 TurnerNation on 10.26.22 at 9:54 pm

This weblog tests all spirits; 18-year-old scotch, especially.

New game: have a drink each time you read ‘Bunnypatch’ here.

#121 Jennifer#2 on 10.26.22 at 10:34 pm

I officially declare that Canada have entered a long Stagflation. Bank of Canada has decided a short deep dive into the abyss is not going to be tolerated, at least not yet.

They seem to prefer a long slug instead. At this interest rate, even if another 0.5 is coming, will not be enough
to bring inflation to 2%.

I am in the camp, that no matter what, Canada is already in recession. It will be deep, due to high level of debt. After that, a long at least 10 years of Stagflation.

I am not optimistic on a world economy growth for a long time.

#122 cramar on 10.26.22 at 10:42 pm

Almost 2/3 of Americans are living paycheck to paycheck, and over half those earning over $100,000 are in the same boat:

https://www.cnbc.com/2022/10/24/more-americans-live-paycheck-to-paycheck-as-inflation-outpaces-income.html

This will not be getting better anytime soon. Bad financial winter coming for North Americans and Europeans.

#123 The Gold Standard on 10.26.22 at 11:05 pm

Cheaters gotta cheat:

https://www.burnabynow.com/local-news/burnaby-real-estate-licence-tutor-violated-non-compete-clause-in-agreement-with-ex-employer-6007687

#124 T-Rev on 10.26.22 at 11:10 pm

They definitely blinked. Which is horse scat if you ask me. The only way the inflation beast gets tamed is with hawkish increases, and people BELIEVING worse is still to come.

They just showed hesitancy, and it’s only going to make the job harder and worse. Plus, I’m really sick of hearing inflation, Covid, supply chains, “chips”, and “shortages”, used as excuses. I want there to be so little demand that people and businesses are begging for work and for sales because I’m tired of the attitude.

Anecdotal note: I’m in the market for a new vehicle. Have been to a half dozen dealers, gotten the EXACT same line everywhere: inventory is limited, you’d better out a deposit down, I’ll pre-sell you one and if we’re lucky it’ll be here in 6-12 weeks, etc. and miraculously once I walk away, every single one of them, EVERY ONE, who told me they wouldn’t be able to get me what I was after for months called within the week to say they had just received some inventory that, GASP!, was exactly what I was after. I’ll admit, there’s definitely limited on lot inventory of some stuff, but for the most part I’m seeing dealers jammed with cars while claiming they don’t have any. The ones that are low on inventor are still getting stuff in continually. They just don’t want you to know that.

Might be time for a small consumer strike. Just stop buying sh*t until businesses smarten up. They’ve all gotten very used to making higher margins on less volume and they like it, and they’re intentionally controlling supply as a result.

#125 the Jaguar on 10.26.22 at 11:11 pm

Felix. This is one for you. Not Friday yet, but sometimes good news cannot wait.

This little bugger hung on in the forest under unimaginable circumstances then found his way home due to faith, hope, and the charity of two local Canmore residents. I doubt most humans would have survived 54 days.

https://calgary.ctvnews.ca/never-gave-up-hope-missing-house-cat-returns-home-after-spending-54-days-in-kananaskis-1.6126320

#126 Winston's delite on 10.26.22 at 11:16 pm

Unfortunately the 50 point move will cause the Loonie to fall heavily against the usd like the JPY, and emerging market currencies. Let me channel some Churchill here, this is the beginning of the end but the end of the beginning. Buckle up folks!

#127 AntMan on 10.26.22 at 11:35 pm

The bank blinked. We’re screwed. Recessions come and go but inflation is the herpes of the economy. Time to dig up Paul Volcker. Man we’re screwed.

#128 Observer on 10.27.22 at 12:14 am

#114 Mattl on 10.26.22 at 8:56 pm

And Singh lobbying for the BOC to back off is insane, so much for being a man of the people – inflation hurts lower incomes the most. Talk about losing the plot.

^^^^^^^^^^^^^^^^
For sure.

#129 april on 10.27.22 at 12:59 am

Condos in the Lowermainland bc don’t seem to be dropping their prices….crappy old wood frame buildings, asking up to 400.000 for one bedrooms, no ensuite laundry, in the outskirts of Vancouver and sitting for many months. These sellers are about to catch a falling knife.

#130 Flgecer on 10.27.22 at 1:07 am

127 AntMan on 10.26.22 at 11:35 pm
Recessions come and go but inflation is the herpes of the economy. ”

R u saying inflation is moving at a blistering pace?

#131 James on 10.27.22 at 1:08 am

While all you so called “rich” babble on this forum, I will keep going to the gym everyday. Will make more important gains than greed ever did. You all spend too much time worrying about money and it will be the death of you.

#132 Ciena on 10.27.22 at 2:07 am

110 – Avocados are not cheaper in BC than they were a few months ago. I’ve been steadily paying $2.99 for 5 months since moving to Victoria. About once a month or quarter they go on special for $2.50 for a week. Similar pricing to Vancouver.

#133 Summertime on 10.27.22 at 3:56 am

Inflation is being crushed – “In the last three months, CPI inflation has declined from 8.1% to 6.9%, primarily due to a fall in gasoline prices.”

And that absolutely made my day. CPI of 6.9 %, read real inflation/cost of living/ around 12-15 %, rates at 3.75 % and inflation is being crashed…

#134 Summertime on 10.27.22 at 4:00 am

I said that central bankers will lie about their rate hikes, they are causing, not fighting inflation. After all, that is their mandate. Just talk and no guts.

I have been proven correct again. We have seen nothing of inflation yet. Return to 2 and 3 % inflation?
Now that was funny.

#135 Steven Rowlandson on 10.27.22 at 6:46 am

It is easy to understand why government and real estate would favor a decline in interest rates or even a stop to rate increases. Higher rates raise interest expenses for government and curb sales for the real estate market and possibly cause price drops resulting in losses for investors, lower commissions and lower property tax revenues for local government. They all have an interest in cheap dollars created by debt.
The central banks on the other hand need to protect the perceived credibility of their product and enhance income from lending.

#136 maxx on 10.27.22 at 6:54 am

#45 Brett in Calgary on 10.26.22 at 1:31 pm

¨The best buys are always when it feels wrong. ¨
I can´t tell you the number of times this has happened to me – feels wrong because it all comes into focus so quickly. Bizarre sort of experience, but it´s never steered me wrong.

#137 Dharma Bum on 10.27.22 at 7:50 am

BOC: Gutless

The backlash will hit us all come January.

We will eventually have to pay the piper.

Bring on the pain.

#138 Dharma Bum on 10.27.22 at 8:06 am

#87 Victor Llearna

Monthly OAS payments might buy a Starbucks coffee.
———————————————————————————————————

Maybe, but not a Venti.

https://www.youtube.com/watch?v=SSk0B0dVq4g

#139 crowdedelevatorfartz on 10.27.22 at 8:19 am

@#131 James
” You all spend too much time worrying about money and it will be the death of you.”

+++
Odd that you comment about “people with money on a financial investment blog”.

Too much money will be the death of us?
Really?

I always thought it was the LACK of money that was the death of most people.

#140 crowdedelevatorfartz on 10.27.22 at 8:29 am

“That the BoC is being bullied by political pressure into an early retreat, that inflation could surge if rates languish, that homebuyers and stock investors start to recklessly party again, and we go through this pain again too soon.

Let’s hope the central bankers know what they’re doing. After all, there’s a track record…”

+++

When the bank rates were at historic lows and housing prices were at historic highs the banks and politicians did nothing month after month after month.
They rolled the dice and let it ride.
The cost of living (food, rent, and oh yeah gas) skyrocketed.
And when they lost…..
We taxpayers paid and paid and paid.
We’re still paying.

This isnt over by a long shot and hopefully Trudeau is a deer in the headlights when the next election is finally, finally forced upon him.

#141 crowdedelevatorfartz on 10.27.22 at 8:36 am

When all the smartphone satellites are gone …..

https://www.reuters.com/world/russia-says-wests-commercial-satellites-could-be-targets-2022-10-27/

Will people still stare at their blank dark screens and ignore the rest of the world?

#142 TurnerNation on 10.27.22 at 8:40 am

WOW Posted in July 2020.
Anyone renewing their mort-gauge at thrice the previous rate, will get this::::

#93 TurnerNation on 07.21.20 at 8:51 am
Did you know…in the global New System private property ownership is to be removed? This is why we are being distracted. Low interest rates are to suck everybody in. Classic shell game.
No-one will come to your front door and take your house, no. Then how?
Incrementalism. And it’s begun.

– Last evening a blog dog mentioned their home was re-zoned into mutli storey. If taxation becomes untenable, you will sell to developers.
– If the city takes 5% of your home’s value in taxation each year, and the market is flat or falling, how many years until you have Zero equity – and ownership of nothing?
– Add a 5-10% regular “home equity tax”. Now many shortened years till your equity is zip?

– In short, as I’ve been saying here for months: The Crown Bankers are using their Crown Virus to take back Crown Land. Get off.

#143 Pivot! Pivot! Pivot! on 10.27.22 at 8:52 am

The Germans are conducting their own pivot. Tearing out windmills to re-start mining coal.

Being cold and hungry focuses the mind. I once had a university professor who said that if your children are freezing and starving you’ll strip mine Rouge National Park to save them. Germany is waking up to that reality.

Let’s all offer our support for our PM the wisdom to see this reality for himself and stop the ongoing destruction of radical green policies.

https://townhall.com/tipsheet/leahbarkoukis/2022/10/27/wind-farm-getting-razed-for-expansion-of-coal-mine-n2615092

#144 millmech on 10.27.22 at 10:03 am

https://ca.finance.yahoo.com/news/europe-likely-see-another-jumbo-081153693.html
It does seem like the rest of the world does not share the view that inflation is crushed, watch the big boys next door raise 75 basis points at the next meeting. If everyone else keeps raising rates and we hold watch the dollar plummet and inflation of imports will devastate our economy and no amount of increases will stem the hemorrhaging then, it will be too little and too late.
Our host talks of credibility of the BoC, it will be lost on the money movers who will get better bang for the buck elsewhere (looking at you England).
Why put your money into CAD when EURO or US pays 25 basis points more as capital flows to where it gets the best return and that will not be CAD.

#145 Shawn on 10.27.22 at 10:33 am

A nation of immigrants? Not really.

As about a sixth generation Canadian, I am not an immigrant. In fact 77% of Canadians were apparently born here. We are a nation of native born Canadians actually.

But I was surprised to learn that 23% of the people in Canada today were not born here and especially that this was the highest percent ever. Higher than in the big immigration waves of the early 1900’s!

This is big news. Not bad news to me but certainly big news.

#146 IHCTD9 on 10.27.22 at 10:33 am

#128 Observer on 10.27.22 at 12:14 am
#114 Mattl on 10.26.22 at 8:56 pm

And Singh lobbying for the BOC to back off is insane, so much for being a man of the people – inflation hurts lower incomes the most. Talk about losing the plot.

^^^^^^^^^^^^^^^^
For sure.

______

Singh is like Trudeau. The worst leader the party ever had. Singh provides Trudeau with years worth of additional power and an effective majority. Trudeau provides Singh with a one time 500.00 cheque for almost zero Canadians. Hahaha! Good job Jag…

#147 Shawn on 10.27.22 at 11:09 am

A nation of native-born Canadians but 23% apparently foreign-born.

The news was here:

https://www150.statcan.gc.ca/n1/daily-quotidien/221026/dq221026a-eng.htm?CMP=mstatcan

#148 Shawn on 10.27.22 at 11:14 am

Turner nation on property taxes

Nothing new. It must be over 30 years since I read someplace that government can effectively confiscate your property through a combination of property taxes and rent control.

So it’s old news. But we are still here. Life is still great. Opportunities abound.

We need government and we do get a vote. Try to relax.

#149 Yukon Elvis on 10.27.22 at 11:28 am

#141 crowdedelevatorfartz on 10.27.22 at 8:36 am
When all the smartphone satellites are gone …..

https://www.reuters.com/world/russia-says-wests-commercial-satellites-could-be-targets-2022-10-27/

Will people still stare at their blank dark screens and ignore the rest of the world?
++++++++++++++
Empty threat. There would be retaliation and Russia would freeze in the dark.

#150 AntMan on 10.27.22 at 11:45 am

#130 Flgecer

Good one.

#151 TheDood on 10.27.22 at 11:53 am

Might be time for a small consumer strike. Just stop buying sh*t until businesses smarten up. They’ve all gotten very used to making higher margins on less volume and they like it, and they’re intentionally controlling supply as a result.
____________________________________

I’m with you. Buyers have ALL the power and don’t realize it. Sellers use witchcraft and snake oil to trick you into thinking you NEED something, and most buyers (including me) fall for it.

#152 Observer on 10.27.22 at 12:10 pm

#146 IHCTD9 on 10.27.22 at 10:33 am
#128 Observer on 10.27.22 at 12:14 am
#114 Mattl on 10.26.22 at 8:56 pm

And Singh lobbying for the BOC to back off is insane, so much for being a man of the people – inflation hurts lower incomes the most. Talk about losing the plot.

^^^^^^^^^^^^^^^^
For sure.

______

Singh is like Trudeau. The worst leader the party ever had. Singh provides Trudeau with years worth of additional power and an effective majority. Trudeau provides Singh with a one time 500.00 cheque for almost zero Canadians. Hahaha! Good job Jag…

^^^^^^^^^^^^^^^
Could be worse. Could be bitcoin, “freedom” convoy supporter PP as PM. God forbid.

#153 Tony on 10.27.22 at 12:19 pm

Inflation can’t rollover in Canada if its increasing in the entire rest of the civilized world.

#154 Dr V on 10.27.22 at 12:30 pm

144 Millmech

ECB rate is well below BOC rate. They were late to the party and France and Italy are already squawking about the hike.

https://www.washingtonpost.com/world/2022/10/27/ecb-rate-hike/

If Jerome goes big, then Tiff will have to reconsider. Next BOC announcment is early December which isnt that far out.

#155 Ponzius Pilatus on 10.27.22 at 1:01 pm

143 Pivot! Pivot! Pivot! on 10.27.22 at 8:52 am
The Germans are conducting their own pivot. Tearing out windmills to re-start mining coal.

Being cold and hungry focuses the mind. I once had a university professor who said that if your children are freezing and starving you’ll strip mine Rouge National Park to save them. Germany is waking up to that reality.

Let’s all offer our support for our PM the wisdom to see this reality for himself and stop the ongoing destruction of radical green policies.

https://townhall.com/tipsheet/leahbarkoukis/2022/10/27/wind-farm-getting-razed-for-expansion-of-coal-mine-n2615092
——————-
Exaggerate much?
Germany has about 30,000 wind turbines.
The “wind farm” in question has 15 turbines, which are over 20 years old.

#156 Shawn on 10.27.22 at 1:24 pm

Cancel any 5 year mortgage rate hikes this week

5 year Canada bond has retreated to 3.36% down from a recent peak at 3.9%. That’s a BIG decline.

Fed will go 0.50% – my prediction.

#157 WileE Toronto on 10.27.22 at 8:45 pm

Hi Garth,

In case you do not already know, the house you featured @108 Crawford around Trinity Bellwoods in TO sold for 2.1 m . The renovator lost big but the new owner will do well with the purchase , just my opinion , hope you are well, thanks for the blog, take care

M51ON