When bankers go bad

So the bankers are stretching out mortgage ammos to save their over-indebted and (likely) financially illiterate house-lusty clients. The lenders continue to receive full interest, have real estate security backing the indebtedness, and are covered by CMHC insurance. Nice gig.

The borrowers get to stay in their digs and keep monthly payments static, yet end up with years more of debt and tens of thousands in additional interest – while their assets erode in value. Dubious outcome.

This is what happens when a property-horny nation runs smack into the wall of rising rates. Now we hear there are additional consequences, after the Big Banks dropped their latest financial statements. The provision for bad debt has just exploded by well over 500%, as the financial guys set aside $2.4 billion to cover losses incurred as borrowers go paws-up. The bulk of that (if it occurs) would be with business, credit card, car or personal debt. Like we said, real estate is different and the lender always ends up with enough flesh.

There’s more news: it’s not over.

Jay Powell, boss of the Fed, is in the midst of two days of testimony before US lawmakers. Here’s what he said: (a) if economic data stays robust (watch Friday’s job numbers) the CB will carry on with increases; (b) the ‘terminal rate’ – the point at which they stop hiking – will probably be higher than previously thought, beyond 5.1%. It’s now 4.57%; and (c) he admitted, “recent data have partly reversed the softening trends that we had seen just a month ago.”

Okay, translation: US rates will swell for sure March 22nd. A quarter point at least, and perhaps a half. Additionally, the terminal rate may now be at or beyond 5.5% – meaning there’s a full 1% to go south of the border before guns are holstered.

Here in the land of poutine and Dr. Pepper the bank rate currently sits at 4.5%. Our guys will hold the line Wednesday morning, as the Bank of Canada assesses the impact thus far on the economy. As we told you, some economists are arguing the cost of money needs to jump further, lest our dollar lose ground and fuel inflation (since we import gobs of stuff).

Happening already, of course.

The loonie fell 1% Tuesday after Powell started yakking. As this is written, it’s trading at 72.7 US pennies, weakening as the American greenback ascends. One year ago, our currency sat at 80 cents US, so the decline has been substantial and the inflationary impact undeniable.

Down she goes: loonie limps as US talks tough

Powell seems okay with higher rates, increasing unemployment and consequences on Wall Street (where stocks dropped as he spoke) in order to crush inflation and turn it into disinflation. Our guys are trying to deal with the American reality while at the same time being mindful that crazy Canadians owe about two trillion dollars in household debt, now impacting the banks. Since our economy is more than 60% based on consumer spending and emotions, this is moderately terrifying.

Can Tiff hold out and stay on pause?

Should he even try for a soft landing, or rip the band aid off and add another full point to Canadian rates as the ultimate move against inflation? That would give us a bank prime of 7.7% and your grandfather with a floating-rate reverse mortgage would have a cow.

Then the nascent housing revival would be snuffed, prices topple again, the jobless ranks increased amid a spate of layoffs with a late-2023 recession assured. Worth it?

What would you do?

(They read this. Be constructive.)

About the picture: “I have read for a couple of years,” writes Stuart. “Worked in finance through the 80’s. My first mortgage was 15.75%, 5 year fixed,  what I could afford. Worked through Penny Auctions, Farm Survival Groups. Not much has changed,  GDS, TDS thrown out the window. Lender greed to obtain market share. I drive a 15 year old truck, shiny, bells and whistles never impressed  me. Single income family, two boys going down the same path. Kwik my faithful pet and hunting companion.”


#1 Alois on 03.07.23 at 3:13 pm

Think I will start my own bank…

Can’t be that hard….

(Free toaster with every deposit over $1 Million !!! )

#2 Barcino on 03.07.23 at 3:16 pm

Rip the ban aid off. Pain now and lesson learned.
Make people appreciate jobs again. Change an entire generation work ethic. Lower the beaver fever for housing. Let’s do it Tiff!

Thank you for the post.

#3 Happy in Calgary on 03.07.23 at 3:17 pm

Tiff – very tough for sure. They encouraged people to take on debt & now the Prime rate has tripled. Canadian dollar vs US dollar – will hurt our imports dearly.

This month I go golfing to Phoenix – wow – a round of golf is easily $200 Canadian – no shortage of cash.

May – going to Pittsburgh & Philadelphia to watch the Blue Jays play. Hundreds of hotel rooms at $500 Canadian a night or higher – hard to believe. Through shopping around we got our room in Pittsburgh for $300 (parking included) Canadian a night (downtown core) & in Philadelphia $200 Canadian a night (staying well outside the downtown core).

#4 Popeye on 03.07.23 at 3:20 pm

Who here drinks Dr. Pepper?

#5 Captain Uppa on 03.07.23 at 3:21 pm

It’s easy to say rip the band-aid off when you believe you won’t be impacted.

Removing emotion from the equation – as Tiff must do – I would hike rates and end this.

#6 Frank on 03.07.23 at 3:21 pm

I don’t know what I would do, but for those who are getting railroaded by these rates, it’s not fun, it’s the difference between a house and fully contribute to TFSA and RRSP, and just now just a house(that’s worth less). I know it could be worst but it still sucks.

#7 T-Rev on 03.07.23 at 3:24 pm

Inflation is a much, MUCH, bigger concern to me and my family than interest rates. I want them to go as high as they need to go, in order to wrestle this thing to the ground, and quickly. Rip the bandaid off so we can get back to 2%.

#8 Kootenay Dave on 03.07.23 at 3:24 pm

Haven’t we followed the Fed close to 100% of the time… why should it be “different this time”? Raise rates and feel the short/medium term pain in hopes things will somehow be better for our children in the long term.

#9 Oakville Rocks! on 03.07.23 at 3:25 pm

I think the Bank of Canada will have to keep an eye on the Loonie and likely increase rates in tandem with the Fed.

Tiff has little choice. The question is how low is he willing to let the dollar sink before he acts. I cannot see him allowing it to slip below 70 cents without acting to increase rates.

As an importer, as our dollar falls we have no choice but to increase our prices. And cautiously lower our prices if the dollar should recover. Of course our quotes for the past year have reflected the expectation that the dollar would fall.

#10 jess on 03.07.23 at 3:25 pm

2m more unemployed? creative destruction
@3.4 %

remember the old saying go to work for 9 out at 3 golf course at 6.


Family sues Airbnb after 19-month-old dies of fentanyl toxicity during stay in Florida rental
Enora Lavenir died Aug. 7, 2021, one day after her family checked into an Airbnb rental in Wellington. They were staying there during a trip from France.


#11 tsirrus on 03.07.23 at 3:27 pm

Question: Stretching the term from 25yrs to 30yrs+, does it affect the conditions for the CMHC insurance?

Something like “It’s cute that you’re trying to toy with the conditions, but this mortgage is not insured anymore because of it”. I assume not (banks are not stupid), but could you elaborate on the subject? What *would* affect the CMHC insurance if this doesn’t? If nothing does, doesn’t that open the door to moral hazard?

#12 Mr S on 03.07.23 at 3:28 pm

I think they are stuck and they know it.
Raise rates => more defaults / higher carrying costs.
Do nothing => tank the dollar => higher import costs. Lower rates => JK LOL.

I think what needs to happen, and will happen, is deleveraging. If you are able to unload your debt and begin to pay down what you can’t, fast, you will be ok. You will contain the bleeding. If you wait, you will be stuck with both an unsellable asset and the debt. USA, circa 2009. The difference being that mortgages in America are non-recourse.

After that round is done, what needs to happen next is some form of austerity. We cannot fund government indefinitely through debt. It has never really ended well, and especially if the interest rates are even sort of normal.

My 2 cents. Love to hear your rebuttal, oh Garth.

#13 Dismal Scientist on 03.07.23 at 3:30 pm

Pay me now or pay me later. I think everyone on this blog knows which one is better. Hike 50 bps tomorrow.

#14 Flop… on 03.07.23 at 3:31 pm

Flop Drops.

You ever wanted to buy a condo in Abbotsford?

Huh, me neither, but when people need shelter not everyone needs or can afford a 4 bedroom house.

Even with all the stupid money floating about can you buy a decent condo for 100k, spoiler alert, the answer is yes.

The details…

Original ask 1.32

Assessment 1.22

Just sold for 1.03


Caveat, yeah gotta be over 55,hey that’s nearly me, gotta pay close to $1500 a month for lifestyle package that includes 3 meals a day and weekly housekeeping, but even with all that if you paid 100k cash, your monthly expenses would be around 2k which sounds doable for most folks considering the current cost of living.

If my Mum was living here, I would likely be checking something like this out, still got a bit of independence but also a little bit of help as you age.

I said it was 100k, it’s actually 103k, so I guess if it matters to someone that much I’ll get the 3 k difference out of my TFSA…


#15 Tim on 03.07.23 at 3:32 pm

Rip the bandaid off. We CANNOT let inflation get baked into everyone’s expectations or we’ll be in a real pickle in a few years.

Let everyone understand that there are many, many, many numbers higher than 3.25% and that your mortgage can go there.

Let house prices be whacked by sharply higher interest rates. And at the same time, make the long-overdue move of making capital gains on a principal residence taxable, AS WELL AS capital losses being deductible. The former was never politically feasible as long as the latter was unthinkable, but now that we’re here, a lot of people will be happy to take the reduced haircut. And everyone learns a valuable lesson (like, really learns it.)

#16 Rook on 03.07.23 at 3:33 pm

$2.4 billion buys you, what? A couple dozen houses at today’s prices? So, that’s what? Provisions for maybe 100 mortgages going paws-up?

I was trying to finish this up with a witty and sarcastic joke (I’m here all week, try the tacos!), but there’s nothing funny about the pickle we’ve gotten ourselves into. It just makes me sad.

#17 Parksville Prankster on 03.07.23 at 3:33 pm

It really depends on which side of the equation a fellow or fellowette falls on, as to which team you’re rooting for.

Seniors and savers want the rate to go up to support a decent return on savings while keeping inflation in check.

Those operating on margin/leverage and borrowers want it to go down, or at least stop rising.

Business owners and landlords want it to go down to improve margins and CAP rates.

Governments walk a razors edge. If it goes down, inflation blooms, if it goes up debt becomes more expensive.

Lots of moving parts and varied opinions, that’s for sure.

#18 The Original Jake on 03.07.23 at 3:33 pm

Crank’r up. Tiff will cave tomorrow but he cannot avoid the inevitable forever. He will raise once the Spring horniness has passed.

#19 The real Kip (Ret) on 03.07.23 at 3:37 pm

Tiff is a wimp. Did he ever really think he could knock back 7% inflation with 4.5% BoC rate. If he did the he’s the Greatest Fool.

#20 Paully on 03.07.23 at 3:38 pm

They need to raise rates to get a handle on inflation. They also need to rein in Federal Government spending. The debt and deficit are out of control.

#21 Lower the Boom....er not on 03.07.23 at 3:38 pm

Yogism #59: “It is a stretch for an extended mortgage to be a premature reverse mortgage”.

#22 Dolce Vita on 03.07.23 at 3:42 pm

Raise Rates.

1. No recession so far.
2. Historically, inflation vanquished quickly when Rates > Inflation.
3. Hold rates firm or lower first whiff of recession.

I do not envy Tiff nor Jerome an iota.

Charybdis & Scylla.


Transferred out of CAD Cash my US stocks into USD Cash. Hold USD dividends there for now.

Curious to see what they do with the Non-Resident Withholding tax in the US account?

Thanks WebBroker for having made that easy & fast to do b/CAD starting to lose its value in chunks (1% Tuesday – blind, dumb, luck on my part … as usual).

Probably see some capital flight out of Canada if little old Paleo me figured it out recently, the Pros will have had long before.

#23 Comrade on 03.07.23 at 3:43 pm

I think they should raise the rate 0.25 tomorrow. Tiff again spoke out of terms, should never called pause, just like he should never said the rates will stay low for very long time just before he started raising them. Maybe pause is appropriate, maybe not, he should have waited for data to present this case.

I just do not understand how we can be so disconnected form U.S. approach when our economy is largely dependent on them. And somehow inflation is under control here, but not in U.S. yet everyone is trying to convince us that this is the global problem, and not isolated to Canada or fault of our politicians. Here is an example, when it comes to it, that this was indeed fault of our politicians for not acting boldly in timely manner.

#24 Odif on 03.07.23 at 3:44 pm

Good thing my portfolio is only 20% Canadian equities, and the rest is not hedged to CAD, so I get exposure to USD, EUR, etc… In any case, hopefully our CB changes the tone and hikes some more.

#25 Overstretched & Scrambling on 03.07.23 at 3:48 pm

Pack up Kids, Mom and Dad just lost the house.

#26 DON on 03.07.23 at 3:48 pm

Are Banks in the business of emotions.

Regardless, after increased interest payments are doled out to the lenders, will Dick and Jane have any money left to spend in our 60% consumer driven economy? Additional interest rate increases would just add to the lack of money being spent. Then again any increased inflation resulting from not following the US Fed will also take money off the table that could be spent in our economy. Rip the band aid or a long slow debt probe up the ying yang.

Also hearing reports that used cars prices took the larger monthly growth since 2009 at 4. something.

#27 Adm Steve-O! on 03.07.23 at 3:49 pm

Tiff pauses and then follows the Fed moving forward and blames US. As BoC does 93% of the time. So says Garth again and again over the yrs.

#28 Shirl Clarts on 03.07.23 at 3:49 pm

Tiff, you have a way out. You did say that you would be monitoring things closely. The data shows that the market is not cooling fast enough.

Raise rates a quarter point on Wednesday. They’re going to hate you now or later, rip off the Band-Aid.

Do it for the loonie!!!

#29 Franco on 03.07.23 at 3:49 pm

Looks like a soft landing could be a myth and the D word is being thrown around by some, I sure hope not as a hard landing will be bad enough. No one knows what is coming, but it will come, you can bet on it.

#30 Caffeine Monkey on 03.07.23 at 3:54 pm

What would you do? I would pour a drink that’s a little stiffer than Dr. Pepper.

Inflation is the greater risk. Along with the unemployment rate, it’s one of only two things that the central bank should allow to sway its decision making. If the BoC lets the Canadian dollar fall significantly, everything gets more expensive.

While the prices of a mouldy stucco teardown in East Van might also be of concern, it’s not their mandate to protect us from ourselves.

#31 Miff Tacklem on 03.07.23 at 3:54 pm

Rip the bandaid off. The CPI is a bogus number anyways. Inflation is far higher than Stats Can is reporting and if Canada is to survive and grow, we need to break the housing bubble.

I’m sorry Canadian boomers who took out reverse mortgages. You had the easiest lives of any generation in the world in all of history, you should have planned farther ahead.

#32 wallflower on 03.07.23 at 3:54 pm

Credit scores – how does this all affect credit scores?
None, benign?
Worse? Better?

#33 Ed on 03.07.23 at 4:02 pm

Well this is uncomfortable…

Oxford’s Tom Jefferson, the lead author of the Cochrane review, summed up the real science on masks: “There is just no evidence that they make any difference. Full stop.”

#34 AM in MN on 03.07.23 at 4:03 pm

Do it, do it now. 1/2 point x 2, and put the squeeze on the banks regarding mortgage debt. Use every law to make them take some of the pain.

This is the classic war between labour and capital, of which capital has been winning for a couple decades now.

Keep inflation lower (and paychecks higher) and let the greater fools pay the price (for a change).

BTW, no chance T2 and the banking elite let this happen, the paycheck slaves are the ones who need to take this on the chin.

Also, the world has changed. There is no employment problem if the virtue signalers’ let the industrial economy grow.

#35 Jens on 03.07.23 at 4:03 pm

So the banks must be raking in record profits from all the interest they get. But they already know the party can’t last as a large chunk of their clients will be unable to pay or renew their mortgage. The spectre of still-rising interest rates makes this ever more certain.
Having almost completely paid down my own mortgage the old-fashioned way, I hate to write this, but at some point the banks will be forced to partially write off and forgive mortgage debt to avoid dealing with a flurry of foreclosures.

#36 DON on 03.07.23 at 4:03 pm

Maybe Tiff is pulling over for a bit and letting the US take pole position. Then the blame can be placed on the US. Tiff has access to the data early does he not? Human nature is at play here.

Did Mr. Volcker want to raise rates at first?

#37 Dolce Vita on 03.07.23 at 4:05 pm


Distributions of household economic accounts, wealth, by characteristic, Canada, quarterly Dollars (x 1,000,000)

Q3 2022

Total liabilities
….Mortgage liabilities = 2,079,185
….Other liabilities = 762,134 *


1st Qtr 2023 $2.4B bad debt allowance of Other Liabilities not much (+$370M one year ago, 1st Qtr 2022).

Though, +500% increase in 1Y an eyeopener that’s for sure. Hopefully, the banks do not have to use much of it.

Clickbait “R” word in article title:



* Other liabilities include major credit cards and retail store cards, gasoline station cards, etc., vehicle loans, lines of credit, student loans, other loans from financial institutions and other money owed.

#38 Blobby on 03.07.23 at 4:07 pm

I think the best thing to do is to do a 50 point hike tomorrow.

However, they can’t do that, without losing face, as they’ve said they’re going to pause. So they’ll have to wait until next time and go for the 75 point hike

#39 LG on 03.07.23 at 4:08 pm

It’s for the people who have expertise in economics to make the best economic decisions for the country’s economy.

If individuals discover that they have made bad choices, that’s for those individuals to learn something about themselves.

What teachers don’t teach at school, or parents don’t teach at home, life experience fills the gap.

For some, this is a life lesson.

#40 JJ on 03.07.23 at 4:09 pm

Where is the inflation # at? Is it 2%? Is it 3%? No, not even close. Where are houses prices? Back to pre-pandemic prices? Nope, not even close. Where is our loonie? Close the US dollar? Nope, not even close.

Do what you need to do Tiff. Keep those rates arising. Make debt bad, speculation bad. Make saving and working good.

#41 T-Rev on 03.07.23 at 4:10 pm

Near unanimous through the first 32 posters today. Canadians are tired of watching their purchasing power erode, and exhausted by the sheer magnitude of disruption and volatility in everything since March 2020. T-Mack should rip it a surprise half point higher tomorrow to show we’re all serious about getting back to stability. Another half in April. Then see what the fed does before adding another 0-1% in June.

Let’s get real already.

#42 Doug in London on 03.07.23 at 4:10 pm

What would I do? I have no debt, and while another increase or more in interest rates could affect the market value of my investments It doesn’t matter. The dividends keep rolling in so I plan to do absolutely nothing. That’s zip, zilch, zero, the null set, or the square root of F.A.

As for these fools who paid way too much for a house and are getting whacked with higher interest rates who’s to blame. There are 3 persons to blame, namely me, myself, and I.

Last but not least if these higher rates mean many people can’t make car payments, is there a Repo Depot here in The Forest City?

#43 Displaced Canadians on 03.07.23 at 4:11 pm







#44 A Girl Who Invests on 03.07.23 at 4:11 pm

Continuing to raise rates looks like the most logical option. Short-term pain for long-term gain.

Better to get control of inflation now than to wind up with ongoing issues that will be harder to fix in the future and hurt people longer. We would have a better future sooner if we deal with the issues more boldly and swiftly.

#45 Warren-the-lagging_indicator on 03.07.23 at 4:12 pm

They should probably follow the fed but I think they will stay put instead. The amount the banks will make on the elongated amortizations should go to support non-profit housing in the communities in which they reside.

#46 Doug t on 03.07.23 at 4:13 pm

Adult decisions need to be made – rip that bandaid OFF

#47 Raise Rates. Duh. on 03.07.23 at 4:14 pm

As others have said, they should raise rates and crush inflation, RE be damned. Everyone’s wealth is being stolen via inflation and the erosion of purchasing power. If we had sound money, this would not be an issue, but since we trust the CBs to be stewards of our money, they must step up and do their job, which in this case requires higher rates. That is the polite way of saying get your head out of you arse and do your damn job. Lol

#48 Linda on 03.07.23 at 4:17 pm

It may not be what Tiff ‘wants’ to do, but can’t see how Canada can not follow USA rate increases if the BoC is going to keep inflation under control. Does anyone know what the flow through inflation effect is every time our dollar drops against the US dollar? How many cents corresponds to an increase in the Canadian inflation rate due to cost increases for our imported goods? I read somewhere fairly recently – maybe on this blog – that the Canada/USA annual amount of trade is around the $1 trillion mark. So obviously our dollar’s erosion against the US greenback is going to have consequences that the BoC will have to address.

#49 knotaeverdayblogger on 03.07.23 at 4:18 pm

So the choice is, take a 1/2 or 1% increase in payments, or lose multiple percentages in dollar value that increases the cost of every product I buy.

Simple, give me the interest increase and prevent destruction of my dollar purchasing power.

Maybe even government spending/deficits will have to get reality. (Lets hope)

I remember a 62 cent dollar – it was no fun.

#50 the Jaguar on 03.07.23 at 4:18 pm

What would the Jaguar do?

Let’s start with regime change. Talkin’ about the current Liberal government, not Tiff. Cross your fingers and maybe Ursula von der Leyen is in Canada to offer T2 or Freeland the top NATO job when the post vacates in September. How about a ‘two for one deal’, Ursula?

I kind of like that scenario as the crowds in the streets of many European cities are beginning to resemble the early days of the French Revolution.

“$2.4 billion to cover losses incurred as borrowers go paws-up. The bulk of that (if it occurs) would be with business, credit card, car or personal debt.” – GT

Diabolical! Insolvency trustees must be up to their keysters in alligators! Evan Siddall ( the CEO of Alberta Investment Management Corporation ) must be sitting down to a gigantic meal of schadenfreude right now given multiple warnings to all the players responsible for this debacle. Real estate gasbag aside, how in hell did ‘the financial guys’ ever find themselves in a place where that much money needed to be set aside for loan loss provisions? Pete Routledge’s peeps at OSFI better roll up their sleeves, put on their hazmat suits and show up for more than a ‘drive by chicken hawk audit’.

All hands on deck Pete, and when the ‘April 18,2023 OSFI Annual Risk Outlook’ is released it had better have been penned with a blow torch, and if the intent is to signal underwriting changes to take place in September those changes better have razor sharp teeth especially where it applies to investment properties.

As for ” Can Tiff hold out and stay on pause?”. Well… he has little choice except to pause on April 12th, given his last remarks or his reputation hangs by a thread, but as the dollar sinks further and spring break vacations become unaffordable he might need to reconsider. Maybe try the old bait and switch game, Tiff. Pause in April and then ‘sock it to ’em’ on June 7th with 50 basis points.

We need a Knight in Shining Armour to ride in about now. Not seeing anyone worthy as I scan the landscape. Anybody got Nigel Wright’s phone number? Carney’s gone a little ‘meshugge’ on us. We need a guy like Nigel for this job….

#51 Theory of Everything on 03.07.23 at 4:20 pm

Drama Teacher!

…will be gone and not give a crap about this in a year or two.

Let someone else clean up the mess.

And messy it will be.

Oh so so messy.

#52 ts on 03.07.23 at 4:22 pm

If the inflation rate is still high, the higher interest rates apparently not having much of an effect on the housing prices (increasing), consumers still spending, and employment holding, then Tiff should keep on increasing the rates incrementally at .25 along with the U.S.

#53 Dolce Vita on 03.07.23 at 4:22 pm

#22 Dolce Vita

* Raise Rates for the Americans.


Tiff should HOLD for now.

Canada 5.9% doing better on inflation vs. the US 6.4%. Tiff figures it will halve by year end.

Past BoC study showed a 26% xrate spread impacts CPI 0.5-1%.

Problem is US economy still running hot.

When we US import, we import US inflation NOT Cdn inflation.

BoC HOLD for now, hope the Americans lower their inflation rate more with rate increases. See what happens to Cdn CPI in the short term.

Don’t make any rash decisions BoC on could have, would have, should have.

Use EVIDENCE and not conjecture I say.

#54 Theory of Everything on 03.07.23 at 4:22 pm

How long before 1oz of gold = $10,000 CAD?

2028? :-)

#55 Adam on 03.07.23 at 4:24 pm

We should’ve ripped the band-aid off a year ago. Tiff is just prolonging the misery trying to get a soft landing.

We lost our minds for two years. Now it’s time to pay the piper.

#56 john on 03.07.23 at 4:26 pm

Hello Garth,

I don’t understand how there is so much upward pressure on interest rates and yet long term GIC rates are decreasing everywhere? What gives?

#57 KrisTea on 03.07.23 at 4:26 pm

I’m no economist, nor highly financially literate, however my (retired, soon to be 80, fixed income,) mom (who raised 3 girls on her own), expresses stress with every grocery bill, strata fee, gas, insurance, property tax increase, etc, etc. Tiff, you gotta letter rip. Those with limited means are struggling to eat. And when parents put a mortgage above a healthy diet for their growing children (body & mind) we have a much more SERIOUS problem. Gross inflation hurts everyone. Higher rates will normalize an insane house market, that needs some serious taming. And, grand scheme, only effects a small sector.

BTW, I support my Mom financially, paid off her mortgage, so just strata fees to worry about…but EVERYTHING costs SO MUCH more…well here in BC anyway.

This can’t continue…rip the bandaid off. Short pain for long-term gain…(.5%)

and …some wonderful (although hard) life lessons about excess debt and greed need to happen. Real estate= being gambling (+ an addiction) needs to end. In my profession we call it “logical consequences”. Not fun, but healthy soul food.

Potential added bonus… return to a healthy work ethic??? Less privilege and social division???

Dunno, just sharing thoughts really. Unable to do big picture on this one. Not my area of expertise.

#58 You know Val on 03.07.23 at 4:27 pm

Boc has no choice, it’s Bust or Bomb. Inflation Tax is not going away any time soon.
Good job boys. Where would we be without the 2 percenter?
Bring on the People’s Politician.
Pierre Rocks!

#59 Prince Polo on 03.07.23 at 4:30 pm

If I were JPow or Tiff, I would constantly blame politicians for overspending and kickstarting this quagmire. Then I would load 50 bips into my inflation-killing bazooka and keep blasting 50 bip missiles until I was assured that we had killed inflation via massive job losses. Citizens would rejoice from sea to shining sea!

Being a keyboard warrior is awesome!!!

#60 knotaeverydayblogger on 03.07.23 at 4:30 pm

One other thing I remember when our dollar was 62 cents. I saw a lot of Canadian assets bought by foreigners on the cheap.

We sold ourselves out like fools.

They said but we were more competitive with a lower dollars.

Well an example was when Champion grader in Goderich Ontario was bought by the foreign big V company for 62 cents, they closed it down shortly afterwords – wa-lah, the competition was now gone and so were all the good jobs after decades of operation.

Then every municipality and provincial government in Canada had to buy graders from foreigners – duh.

Very sad.

#61 Alois on 03.07.23 at 4:31 pm

Where’s Mr PP?

In pre-sale line up?

#62 SimplyPut7 on 03.07.23 at 4:33 pm

Can Tiff hold out and stay on pause?

No he cannot, the dollar would fall to mid the 60s.

I look forward to buying GICs at 6%.

#63 QuebAnglo on 03.07.23 at 4:34 pm

What would you do?

(They read this. Be constructive.)


The wonks at the Bank of Canada read the steerage section? It’s all beginning to make sense now…

#64 enthalpy on 03.07.23 at 4:37 pm

They have been calling for a soft landing for ages.

most of us know better. Might as well get it over with. Better than kicking the can down the road.

#65 Westerner on 03.07.23 at 4:38 pm

Tiff will likely let the loonie nuke at first as the fed speeds ahead.

Then there will be an awkward back and froth by the BOC trying to keep both real estate and the loonie afloat.

Either way Canadians are in big trouble

#66 Theory of Everything on 03.07.23 at 4:38 pm

I see it!

Drama Teacher goes on speech tour, leaves PM post behind to some liberal pick blank as a piece of paper.

Finance minister goes to NATO.

Tiff quits for “personal reasons.”

All well before 2025, when this house of cards can stand no more.

Good luck! Thanks for all the fish.

#67 SW on 03.07.23 at 4:42 pm

We are in the process of moving in central Burlington and have viewed two houses for rent. Both 3 bed / 2 bath, finished large basements, newly renovated with big backyards. Nice places. Rent is $3800/month each.

Now if we were to buy, the MV for these houses is probably around 1.3 million. Put 500k down, and a 800k mortgage at 5.7%, yields a monthly payment of 5k plus taxes, maintenance and insurance, we are looking at 6k/month. And that is assuming 500k down! Most people could not come up with that. Especially under 40’s without mom’s support.

Renters in these markets are getting subsidized. I don’t know why anyone would be renting out their place in a market like Burlington. Crazy to me.

#68 Eco Capitalist on 03.07.23 at 4:43 pm

I think the BoC should pause and allow time for the previous hikes to work through the system. Where I am currently employed, decisions by corporate seem to lag fiscal reality by a few months.

#69 Chalkie on 03.07.23 at 4:46 pm

Rushing out and buying that home is going to bring sorrow at a tremendous cost, financial and emotional stress. You need to hold out until the fall, better deals ahead, don’t listen to all the hog wash of prices increasing right now, there is a reverse gear installed on this monster truck.

Quote of the day: the sky has no limits, but your budget and family needs does.

#70 Mattl on 03.07.23 at 4:47 pm

Tiff will have little choice but to raise. Therefore his recent guidance, will once again, look silly.

#71 Arcticfox on 03.07.23 at 4:47 pm

Nenner thinks US CPI has already bottomed..maybe reason why all the Hawkish talk in Washington today..


#72 Kilt on 03.07.23 at 4:48 pm

Aren’t nearly 70-80% of mortgages uninsured?
400 billion in variable rate mortgages, half of which hit their trigger point. That could be $160 billion in uninsured mortgages that are going nowhere. Never mind the people who need to renew in the next year or two and were not planning on rates to be north of 5%.

The LTV seem to be in favor of the banks not having to sweat it though, unless of course you get a 50% crash from todays values. Unlikely.


#73 Richard L on 03.07.23 at 4:50 pm

I drink Dr Pepper

#74 Graeme on 03.07.23 at 4:51 pm

Judging by the info in yesterday’s post clearly we are not in exactly the same situation as the US. I’d say the BoC won’t be to eager to follow the Fed all the way.. or much further. We’ll have our own long overdue reckoning with a real estate meltdown.

#75 TurnerNation on 03.07.23 at 4:53 pm

15 year old truck? Sheer and utter over the top luxury. Everyone knows, the deca millionaires on this blog drive 20-25 year old Toyota Collolas with steel wheels naturally.


USD + WFH = Permanent Vacation. (Life’s a journey not a destination?)
This is a cost monthly of a typical downtown kando’s rental.

You can now live on a cruise ship for $30,000 per year
By Julia Buckley, CNN
Updated 10:35 PM EST, Sun March 05, 2023

—- For the Climate Scientists [sic]. Look up, in my city an uncovered sky is a rarity.
O boy what are our Rulers up to. Trust that science.

Agreement Between Canada and the United States of America Relating to the Exchange of Information on Weather Modification Activities
Aware, because of their geographic proximity, that the effects of weather modification activities carried out by either Party or its nationals may affect the territory of the other;
Noting the diversity of weather modification activities in both Canada and the United States by private parties, by State and Provincial authorities, and by the Federal Governments;
Believing that the existing state of knowledge warrants the expectation of further development over a period of time in the science and technology of weather modification;
“Weather modification activities”, means activities performed with the intention of producing artificial changes in the composition, behaviour, or dynamics of the atmosphere;

#76 Dolce Vita on 03.07.23 at 4:55 pm

Most recent I could find:

In 2020, U.S. exports to Canada totaled $255.1 billion USD.

Cdn GDP in 2020:

1.645 trillion USD



So ya, US imported inflation worrisome but not the bone crushing amount Commenters here seem to think it is and its impact on the Cdn Economy.


I think many here travel to the US frequently; thus, sour grapes with the xrate when they spend their CAD there.

So they want higher rates so the US/CDN xrate improves in their favour.

Well healed self-serving Cadre you have there Garth.


#77 Hathor on 03.07.23 at 4:55 pm

Rip the band-aid off! I have always been skeptical that inflation can be stifled with a BOC rate lower than the rate of inflation. While, the banks extending amortizations is a saving gesture for many payers, in the long run, the already toxic level of debt increases! Happy to be debt free at this point in my life!

#78 AmStillNotLogic on 03.07.23 at 4:59 pm

The Banking Business … the best business in Canada with garanteed profits …

The real Lords … the 6 big guys … of the land of Gan.nada are making Billions full fist when the wave goes Up … and again Billions full fist when the wave goes Down … not short of serfs willing to pay even with their butt’s skin.

I like this business !!! Who’s throwing his money in the drain … The Canuck renter?!?

#79 Cheese on 03.07.23 at 5:01 pm

I have no idea where it should go, but today was painful and my portfolio is at a multi year low.

#80 Work and Tumble on 03.07.23 at 5:04 pm

Follow the FED. It’s the right choice.
How can Tiff hold off at this time? He was on the right track and stopped? That was his BIG mistake.

#81 TurnerNation2023 on 03.07.23 at 5:05 pm

Keep raising rates until people stop treating like money is free and T2 spends like a drunken sailor!! They all need REALITY to give their rear end a bite.

#82 Leftover on 03.07.23 at 5:10 pm

Canada would survive another point or two, but there’d be casualties. Not banks, but the Bank of Mom for sure because that’s the equity that would evaporate, if it hasn’t disappeared already.

The US survived the GFC by loosening fiscal and monetary policy, and cleaning up lending and derivatives rules. They lost a couple of significant financial institutions, Lehman’s and Bear Stearns, and nearly saw the last of General Motors. Pretty big stuff, but their economy is diverse and agile enough to evolve; creative destruction in action.

Canada is in exactly the opposite situation, where loose policies (and HELOC’s) created the mess. Our economy is much more reliant on housing than the Americans, far less adaptable, and price-takers when it comes to rates and FX. All of that is exacerbated by our otherworldly level of private debt. Really the only thing we have going for us, surprising to many, is that our level of public debt is actually pretty good relative to other OECD countries.

So, room to raise rates, yes. But understand that households will suffer and there’s no way that we can raise taxes to cover fiscal or political objectives. There’d actually be political benefits for the Liberals if they engaged in meaningful spending cuts as a result of rising interest rates; something they’d never have imagined 12 months ago.

We’re all in this together, tightening our belts. Imagine that.

#83 Mike in Cow town on 03.07.23 at 5:13 pm

It is interesting to note that CAD is losing ground also against the Mexican Peso and other currencies such as the Costa Rican Colón.

Perhaps Canada is becoming less competitive on the world stage.

#84 Keeping At It on 03.07.23 at 5:15 pm

Seen this movie before.

Know how it ends.


#85 OK, Doomer on 03.07.23 at 5:18 pm

Rates must climb until the point of capitulation. Until the psychology changes inflation will always be a breath away.

#86 Adam on 03.07.23 at 5:19 pm

Death by a thousand cuts is worse than a stab to the heart. No one would ever disagree with that. Yet Tiff has pressure from all sides, and so he is choosing the thousand cuts because he doesn’t need to administer them all at once. That’s the caveat. Would you choose death by a thousand cuts, if you could have one cut a week for a thousand weeks? Probably. The loonie is going to plunge into the abyss and then everyone will be complaining as costs for imported goods soar. People won’t be so happy when that TV or iphone or Tesla costs so much more. So what would I do? Tiff needs to, at minimum, keep pace with the US fed. If our economy isn’t strong enough to do that, then we need to pay our dues. We didn’t pay the same dues the US did in the 08/09 recession and we thought we could get away with that. Canada needs to take its lumps and accept there will be hard times, or we will end up like Greece. We need politicians and leaders who are willing to do the hard things even if unpopular. Tiff needs to be the bad guy and embrace that role, even if he doesn’t want to. He needs to do his job and stop worrying about what the optics of it are. The US fed has it figured out. Bottom line, Tiff, if you are reading this, time to man up!

#87 GOLDILOCKS on 03.07.23 at 5:25 pm

We should return to the gold standard.

Never. – Garth

#88 B on 03.07.23 at 5:25 pm

Crank it up Tiff, don’t get caught chasing the USA.

#89 Tom from Mississauga on 03.07.23 at 5:26 pm

Reverse ridiculous guidance and go data dependent, begin QT to fix bond market distortion. Hike later as needed. OFSI needs to fix the amortization problem. Sense there’s a survey coming from Garth on this soon.

#90 Grandv!ew on 03.07.23 at 5:27 pm

Whatever they do it is the time to tell the truth.

No gaslighting, no obfuscation of the facts.

Anyone with access to internet can find out all of this…

At this moment our lifestyles are almost entirely supported by the increases in debt. As per OECD our productivity is at the lowest rung in G20 and in the same time our GDP increase (per capita) is predicted to be the lowest in G20 for the decades to come. Our country’s balance sheet is not strong and healthy as it should be, quite the opposite. All of this can be attributed solely to the fact that we trained generations of Canadians to believe that road to financial security is only in owning the real estate. As a result perverse miss-allocation of capital became greater and greater and R&D investments became non existent for two decades. Most of the manufacturing became off shored and great financialization of the economy ensued. Multiple successive governments over the course of the last two decades are to be implicated with being lazy and just going with the flow of the real estate golden goose.
I thing Churchill can be attributed with saying : “If you find your self in hell, best thing to do is keep on walking”.
We must allow natural forces of the free market to prevail. If that means paper wealth of the real estate owners is going to be reduced to natural equilibrium then that’s what should be allowed to happen.

Are we beyond the point of no return? Would doing the right thing kill the patient (economy and country) ?

I don’t know the answer to that but any tethering and obfuscation of the facts is not building the trust. Quite the opposite….

It is the time for the politicians to become leaders and not just appeasers of the masses.

If it takes 70 years to payoff the mortgage for the home in Canada what is the real price for that property ?

#91 IHCTD9 on 03.07.23 at 5:29 pm

I’d say the banks are already bailing out homeowners with long amortizations and static monthlies. So, don’t let the Loonie get pounded. Rates up, but then consumption down, governments and businesses take the hit. More taxes and unemployment.

The buried homeowners are fine for the moment, let them figure out what to do when this blows over. The government is fine, they can raise taxes. The consumer is fine, they can tighten the purse strings and lower their COL. Businesses need to keep operating somehow, a crappy Loonie for a little while might help. But not too long.

IMHO, raise rates to save the Loonie, but take a long time doing it. Let consumers and businesses have time to strategize, adjust, and clear some of the hurdles. Let consumers and government play Cat and Mouse for a bit. In short, hold the line, and pray for some positive new developments to appear.

#92 Yukon Elvis on 03.07.23 at 5:29 pm

(They read this. Be constructive.)

Their ducks don’t give a quack what we say because we are going to get monkey-hammered no matter what they do.

#93 Neanderthal Ned on 03.07.23 at 5:36 pm

Oh Garth… You are so charming. At least to the Neanderthals who roam and forage on this prehistoric blog.

Provisions for losses? Where do you think that money will end up. That’s right… Into shareholders’ earnings in a few quarters. It’s not a loss… But merely an accounting adjustment as I’m sure you know. Like the Canadian big banks will all go under… NOT!

But really, I’d like to hear from your readers on this. Lets listen to what they have to say.

#94 HH on 03.07.23 at 5:38 pm

So, what’s up with Canada Guaranty? I heard that they insure subprime mortgages and they dish out mortgages to those who can’t come up with a decent down payment and have a low credit rating. It’s privately owned so doesn’t trade on the stock market and the Ontario Teacher’s Pension owns a chunk of it. Is this all true?

#95 NoFool on 03.07.23 at 5:41 pm

Tiff has to raise interest rates here, or our Loonie gets crushed and we pay more for the imported stuff we like. And who would buy our government bonds if he doesn’t?

Rip the band-aid off and let it bleed for a while.

#96 AmStillNotLogic on 03.07.23 at 5:41 pm

What would you do?

STOP being nice Canucks and take the bull by its horns …
the only way out of it … is Through it …

some people will suffer?! … some other people are already suffering …
No escape from suffering … it has to happen to get rid of THIS …

#97 zxcvbnm on 03.07.23 at 5:43 pm

They’re going to let the loonie take the first punch to the face. Hence why they banned foreign buyers just a few months ago.

Also, with the BoC so comfortable with creatively adjusting CPI calculations, I think it’s pretty clear that they’re accepting of much higher inflation but would rather the beater has a fresh coat of paint on it. They put so much effort into massaging these numbers – they’re not stupid, just playing that way.

I think BoC is resigned to accept higher inflation, but will slap a 2.5% sticker on it no matter what the actual read is.

Socialize the losses. If we’re all worse off, are any of us worse off?

I dunno. All I know is that rent is too damn high and I don’t see it coming down anytime soon. It doesn’t matter if renting is technically cheaper than buying. Renting average digs is no longer possible with an average salary. Whatever they do, they should focus on fixing this. It’s demoralizing for us basement dwellers.

#98 Fasa on 03.07.23 at 5:48 pm

Many factors at play and even though the BOC is independent lots of politics at play.

In my humble opinion we need to stay connected to the US rate increases and take our medicine, yes it will pummel housing but just like the US after the financial crisis things need to get worse before they get better.

#99 Sail Away on 03.07.23 at 5:48 pm

When markets are stagnating, don’t forget about the Buffett magic of arbitrage. Most of our decent gains in the last year came from arbitrage.

Activision is still in play for a June merger at +20% upside from today.

#100 Concerned Citizen on 03.07.23 at 5:51 pm

One of the primary reasons we are in the mess we are in today is because central bankers have been protecting ever increasing asset valuations since the GFC. They haven’t let markets stand on their own too feet, because that meant markets would correct to more sustainable levels. That’s why the median Canadian has no hope whatsoever of every owning the Canadian home.

To not raise rates is to signal the markets yet again that current bubble pricing is implicitly approved of by the BoC. That inflation well in excess of the policy rate is the desired policy outcome.

Tiff has demonstrated several times already that he is bad at his job. I expect he’ll make another wrong move and stand pat. 70 cent Canadian peso coming our way… and we’ll be lucky if it doesn’t trend down to 65…

#101 Alois on 03.07.23 at 5:56 pm

Went over some property assessment comparables in my appeal…


…..did they ever screw up…

…….must have relied on AI…

Stay Tuned !!!

#102 kommykim on 03.07.23 at 6:04 pm

It’s a bit like having toenail cancer and the surgeon cutting off as little as possible each time because he’s trying to avoid disabling you. But his good intentions mean you lose your entire leg instead of just the toe.

#103 DOWn on 03.07.23 at 6:06 pm

Seems to me the problem lays within the banks.
Not the borrowers
Jokes on the borrowers who have hit the trigger rate and can’t knock the principal down.

Dumb bankers.

Wake up people your being played.

#104 BCWally on 03.07.23 at 6:07 pm

A conundrum, but let’s think out of the box.
Raise rates and crush inflation quickly no contest there. The dollar must stand.
Drop tax rates on dividend and interest income on RRSP/TFSA qualified investments. Need not be in an RRSP/TFSA but qualifies. Pay special attention to the elderly. I’m thinking 10-15%. Promotes Canadian corps growth.
Brings tax dollars in now rather than having that locked in to real estate. Very few people are making much of anything off of renting a condo/house and capital gains will be slim or none on any sales. Frees up 22% of dwellings over time.
500K lifetime capital gains on everything – including all real estate primary or investment. No exceptions. No penalty in releasing rental housing in favor of tax advantageous cash flow investments that are RRSP/TFSA qualified.
CMHC limited to 60-70% insurance coverage of any future residential mortgages. Lowers future risk to the taxpayer and banks have skin in the game.
Full restructure of government services to a more internet based system with civil service oversight.
Cost reduction through efficiency improvements.
Offices remain open to those that need it. Just expand the phone lines, please.
Last and most importantly, spring budget with economic growth in mind, forget housing incentives and further hand outs.
Stronger economy = stronger loonie = less inflation and less need for high interest rates.

#105 Marsupial in pants on 03.07.23 at 6:08 pm

Feels like Canada will pause until the Fed increases theirs.
Iwit’s gonna be tough for Tiff to do the right thing without somebody crying.

#106 Quintilian on 03.07.23 at 6:16 pm

#91 IHCTD9 on 03.07.23 at 5:29 pm

Businesses need to keep operating somehow, a crappy Loonie for a little while might help. But not too long.

Yes and no, as you might have gathered from previous posts, my GF is in somewhat of a similar business as yours.

She just purchased a Miller/Panasonic Robot. They were having trouble finding welders, so about a year ago she started looking into the feasibility of automating some of the welding.

The quote came in at 125k at the time.
Since then, with the price increase- re inflation, and the wounded CAD the cost has mushroomed to 218k. still worth it, but the price of the parts will have to go up.

=Cost push inflation.

#107 Brian on 03.07.23 at 6:17 pm

The way things have gone to this point, a quarter point on Wednesday practically is a pause. Plus it sends a message, “Sorry folks, we tried, but we’re not out of the woods quite yet.”

After that, reassess. That’s my 3 cents (inflation).

#108 Reality is stark on 03.07.23 at 6:22 pm

What would I do?
That’s comical.
Read my posts you could have figured it out years ago based on what I wrote. I hope you followed my advice.
You could call me Captain America, you can call me El Predicto for rightfully predicting the future, or you could have stayed away from Canadian housing during the pandemic and bought US dollars like I told you to do.
But that was actually the easy part. A grade 9 high school kid could have figured that out.
It’s the elephant in the room which no one in Canada wants to address. We have a productivity problem because we have too many public servants per capita, we pay them too much and they don’t like coming to work.
On balance they are risk averse so transferring wealth to them also negatively impacts your economy.
Now that you are beginning to see the forest for the trees hopefully you’ll stop voting for “woke” candidates that drive you to penury. Vote for those who can drain the swamp who retain citizens trying to build better mousetraps rather than driving them south of the border by taxing them to death.
You honestly thought selling houses to one another was sufficient to build a powerful economy.
It was nothing short of insanity.

#109 DOWn on 03.07.23 at 6:25 pm

I think rates are going up tomorrow or very soon.

#110 Dogman01 on 03.07.23 at 6:27 pm

The Dogman – “Special Rapporteur” to the Bank of Canada…and I do mean “special”

If you do not raise rates dollar will collapse and Inflation will roar, so prevent the pain and drama just raise them now.

The young and newcomers need cheaper shelter, collapse this Real Estate Bubble , rip it off fast. Reward working and productivity not borrowing and speculation.

The Government will be in chaos for the next 4 months…totally distracted and spending like there is no tomorrow- as the Liberals literally have no tomorrow!

Got to go and watch another Foreign leader beg for our LNG which we flare off or sell to the USA for pennies.

#111 Basil Exposition on 03.07.23 at 6:31 pm

Quarter point hike Tiff. Please and thank you. Full disclosure; have a pair of tickets to Taylor Swift in Tampa this April. Need a stronger dollar. Sorry Garth, they are not for sale.

#112 Shirl Clarts on 03.07.23 at 6:31 pm

Tiff, don’t be worried about losing face. Who are you worried about losing face to? If your reputation matters, you will do what is necessary and raise .25%.

#113 Flop… on 03.07.23 at 6:35 pm

Australia added 0.25 to their overnight interest rate today, still behind Canada, definitely letting the US do the heavy lifting.

I reckon Australia’s overnight rate is Canada’s Daytime Rate.

Record breaking, nonetheless, 10th hike in the cycle, started later and slower but it’s now a constant grind higher.

Who knows, could be like that Aussie skater who won the gold medal after everyone else fell over at the final turn…


#114 BCWally on 03.07.23 at 6:40 pm

Gotta go with #84 Leftover. Raise rates, it’s worse if they don’t.

#115 Kurt on 03.07.23 at 6:43 pm

“What would you do?

(They read this. Be constructive.)”

Tough one, Garth. As you have pointed out elsewhere, VRM rates track the BOC rate, but fixed rates track the bond market. Since the US is going higher, this will undoubtedly increase costs for new/renewed mortgages but the effect will be delayed. We probably need to speed things up a bit.

Tiff should continue to raise by very small increments. The idea is to send a signal that he is serious about inflation and will continue to raise until he’s confident it’s going back where it needs to be. He needs to *not* see people acting like he’s brought the punch bowl out every time he pauses.

#116 grasshopper on 03.07.23 at 6:43 pm

Isn’t this inflation due to government overspending?

I don’t see why the Central Banks need to increase interest rates and punish debt holders. The biggest debt holder is the Federal government. (Isn’t it?)

Taxes will also need to be increased increased to pay the higher interest on the Federal (and Provincial) debts.

If the government spent less, inflation would decrease.

Wouldn’t it?

#117 Don on 03.07.23 at 6:44 pm

Okay, translation: US rates will swell for sure March 22nd. A quarter point at least, and perhaps a half. Additionally, the terminal rate may now be at or beyond 5.5% – meaning there’s a full 1% to go south of the border before guns are holstered.”

5.5% eh?

Well, well, well…. called this months ago.

#118 Freedom First on 03.07.23 at 6:48 pm

I am in my seventies, and the best gift I ever got in life, though I didn’t know it then, was when I was suddenly informed that I would have a roof over my head, and food to eat, until I finished grade 12, but everything else was up to me. I had just turned 10.

Freedom First

#119 The Gold Standard on 03.07.23 at 6:50 pm

Mexico’s prime rate is 11% and their Peso has increased in value relative to the Canadian dollar which is squeezing Canadian retirees in Mexico. Canada is lagging behind the USA and Mexico in their interest rates and this is killing the CAD dollar. Mexico is actually now a better place to invest than Canada is, and that’s saying something.

#120 SirHani on 03.07.23 at 6:54 pm

Keep doing what he’s doing.. data dependent.

#121 crossbordershopper on 03.07.23 at 6:56 pm

omg, all well able canadians who have 30 years of work ahead of them will surely just book a discount flight to the us and start living the american dream.
the dollar will go down to 1.45 , and with taxes and lower cost of living what do Canadians need to say go elsewhere. We cant blame Trudeau for everything but he doesnt manage the country well, and the immigrants are not the answer, its the system in place in Canada is the problem. We have to change the way we live and work.

#122 PeterfromCalgary on 03.07.23 at 7:03 pm

Both Canada and the US are going to have to raise rates. The US because of re-surging inflation and Canada because of the dollar.

No one wants to keep raising interest rates but I don’t think CBs have a choice.

#123 Wrk.dover on 03.07.23 at 7:05 pm

The loonie fell 1% Tuesday after Powell started yakking. As this is written, it’s trading at 72.7 US pennies, weakening as the American greenback ascends. One year ago, our currency sat at 80 cents US, so the decline has been substantial

In which box do I claim this loss on my income tax form?

Tiff feeble limp hands have cost me money in more ways I can count!

Why in the world did he not begin raising rates when he took the job?

Because he didn’t think it would be necessary is not the correct answer.

It obviously needed to be done because it hadn’t been done, and needed to be done.

Trying to make our exports affordable is fake news…

#124 Faron on 03.07.23 at 7:10 pm

CB controlled overnight rates need to get real. That’s all I have to say about that. Saw on the web today that the $2 trillion+ getting parked in the reverse repo is costing the US fed a pretty penny. The irony, is that is an effective $monster stimulus each day! Hence the “Demon Core” analogy I made earlier.

#125 Juve101 on 03.07.23 at 7:10 pm

It’s an easy choice to make when you have no choice. Gotta track the Fed.

#126 crowdedelevatorfartz on 03.07.23 at 7:11 pm

Practice “Tough Love” Tiffster.
Teach the lazy and financially stupid that “Debt isnt good”.

A quarter point hike now is far less painful than a half point hike in June.

Chasing the US Fed is Canada’s burden to bear.
We watch our dollar slide ever lower.
Man up Tiff.
Ignore the Liberal Woke machine and keep those increases coming…

Ahhh to experience the 80’s again.
Gals with big hair, shoulder pads, 20 minute workouts…. politically incorrect music….. bliss.

#127 Faron on 03.07.23 at 7:11 pm

A lit of people learning what kind of POS Elon Musk is after his firing of a prominent, highly successful icelandic entrepreneur. Mega self own on Elon’s part.

#128 JOE MAMA on 03.07.23 at 7:11 pm

What would I do? hmmmm, What I wouldn’t of done is sat on my hands and watch Canadians gorge themselves on massive debt. Only thing to do now is follow the feds as closely as possible, and watch what happens. They had lost control a long time ago. I think the last 12 months of RE price drops was just the beginning, was inevitable though with the BOC and governments just turning a blind eye for last 15 years. I hope it just turns into a mild recession, but I have my doubts. Really curious if Tiff actually cares, i doubt he’s losing any sleep about this

#129 Ronaldo on 03.07.23 at 7:17 pm

“There’s a Russian anecdote about a man who loved his dog so much that when the vet told him he needed to cut the dog’s tail off he couldn’t do it all at once, so he did it an inch at a time. Don’t be that kind of manager.”

Sot Tiff, get it done now. Don’t be like the Russian guy.

#130 Wrk.dover on 03.07.23 at 7:20 pm

#129 the Jaguar on 03.07.23 at 1:18 pm
re: #126 Wrk.dover on 03.07.23 at 11:57 am
I’m going to sandblast a car part, so I opened a new bag of sand. What do you suppose I found buried in the sand?

Tiff’s head! +++

This gasbag real estate market isn’t Tiff’s fault and the inflation issue is all over the western world. Seems like everyone wants to blame him or the banks, but that’s BS. Those who chose to purchase overvalued properties without educating themselves on the repercussions of what would happen if rates climbed have nobody to blame but themselves. Anybody with a google finger could have pulled up historical rate charts and played with payment calculation tools. And people like Evan Siddall who was head of CMHC warned everyone, everyday in the media. But peeps preferred to drink the Koolaid and stayed glued to HGTV, etc.

Don’t blame Tiff. He isn’t the only one involved in BOC decision making, and he is trying to land a situation similar to a 747, one engine out, with explosives in the cargo hold. Or would like the job and responsibility?

#130 the Jaguar on 03.07.23 at 1:20 pm
p.s. you on that plane, and you’re sitting in the emergency row….

I would have given that ostrich head a shake, but you can’t fix stupid.

That plane should have never left the ground after he mumble mumbled transitory/no hikes for a long time coming, a year ago.

His inaction with the stick at the helm, proves pilots are just trained monkeys, it is indeed the engineer that makes a flight succeed.

Better-late-than-never-J.-Powell, is the flight engineer!

#131 Hookshott on 03.07.23 at 7:21 pm

#33 Ed on 03.07.23 at 4:02 pm
Well this is uncomfortable…

Oxford’s Tom Jefferson, the lead author of the Cochrane review, summed up the real science on masks: “There is just no evidence that they make any difference. Full stop.”
So he would be okay with his surgeon not wearing one while doing a knee replacement on him? (or maybe a brain replacement!)

#132 Alois on 03.07.23 at 7:21 pm

#103 DOWn on 03.07.23 at 6:06 pm

Seems to me the problem lays within the banks.
Not the borrowers


I agree….

Bankers have a LOT to answer for..

…..IMHO they are like drug dealers that get caught and want society to provide both bail money and amnesty.

Scr*w oph

#133 Amarok on 03.07.23 at 7:26 pm

Higher BoC rate (for longer?) will only fatally hurt some of the highly indebted (call it the 25% of variable rate/HELOC/reverse morgagers).


A BoC rate to far below FFR that invites inflation via currency devaluation which hurts ALL Canadians.

Thus, BoC should hold at 25bps for March with some very hawkish language. If Fed hikes 25bps or 50bps in March and inflation pulses up as CAD drops, then BoC should next increase by no more than 25bps while leaving the bond market and balance sheet roll offs to do some of the cooling work.

Then pause for the summer and see what happens.

#134 TurnerNation on 03.07.23 at 7:35 pm

Bankers are on this weblog? Ewwww.

#135 Gulf Breeze on 03.07.23 at 7:35 pm

Tough call. Those resting on the horns of a dilemma, who squirm too much, get skewered. The best way to deal with it is to stay still and see where the chips fall following Powell’s next rate hike.

Seeing as much of our essential food is home grown and our energy same, then we are talking mainly discretionary spending, (I think?)

It’s important to do whatever it takes to get food and rent prices down right now and the govt is tackling housing. As food is a supply problem (climate) plus a price fixing oligopoly issue, it’s resistant to BOC interest raises.

#136 Ballingsford on 03.07.23 at 7:44 pm

Tiff should raise the rate tomorrow but he can’t to save face. He’s fibbed too many times.
So, a lower canadian dollar makes the imports cost more, and that gets.passed on to consumers.
Uppa uppa inflation goes.

#137 Another Deckchair on 03.07.23 at 7:47 pm

@98 Longterm from yesterday:

It’s very good you mentioned Jevons Paradox.

It was mentioned (by me!) back in June 2021


and Reckless Jane did mention it back in 2015, but it should be mentioned MORE as it describes humans very well, so thanks for bringing it up again.

I like what the Dutch are doing; moving society by polite pats on the butt, while NA seems to get peoples’ backs up by raising conflict, so nobody wins.

I like NotJustBikes on YouTube – the (Canadian) guy now “gets it” and as he says, “once you see it you can’t un-see it”. Not sure that I like his (new?) really negative rage attitude to SUVs, but he does make lots of good points in his latest video:

“These Stupid Trucks are Literally Killing Us”



#138 Mithan on 03.07.23 at 7:51 pm

What I would do is raise rates another 50 basis points at least, but chances are, they are going to need to go higher. It’s going to suck, but in the long run, the rebalance is necessary. People have forgotten, or just lived in a world where there is no risk.

#139 @J on 03.07.23 at 8:00 pm

I’m glad I’m neither Tiff nor Jerome. It’s impossible to know the exact optimal decisions today that will lead to the best possible outcome tomorrow. We’re getting better with more and more history to draw upon, and better analytics, but it is still a tricky game.

I find it fascinating that a 0.5% rise is “normal” but only a bit more 1.0% rise is “ripping the bandaid off”. In the 80’s we had to raise rates an order of magnitude more to rip off the ‘ol bandaid. But I suppose perception and sentiment are more swayed by smaller moves these days.

Having said that, Tiff should be risk-averse, and the biggest risk, by far, is inflation.

So, do the 1% rise. It increases the probability of lowering inflation a bit faster, and strengthens the Canadian dollar just a bit. Housing values will come down a bit (probably) and unemployment up a bit, but we can handle that and in some ways it’s probably healthier for the economy overall.

Note my recommendation actually worsens my personal situation. As part of our portfolio we own commercial properties, so we would be more negatively impacted by a larger rate rise, both on lowering the property values and increasing the financing costs. But I still think it’s the right thing to do for Canada.

“Inflation is as violent as a mugger, as frightening as an armed robber and as deadly as a hit man.” – Ronald Reagan

#140 VicPaul on 03.07.23 at 8:03 pm

Garth –
Our guys are trying to deal with the American reality while at the same time being mindful that crazy Canadians owe about two trillion dollars in household debt, now impacting the banks. Since our economy is more than 60% based on consumer spending and emotions, this is moderately terrifying.

Yes. It’s a tightrope walk for the Tiffster…sadly, protecting the financial lunacy of some, will cause unwarranted incursion on those who showed restraint.

My crystal ball says the BoC will raise .5 in April (catch up to Fed – all explained in the accompanying Monetary Policy Report) then pause (June), to show Canadians, “We are on your side…” then raise again in July, again, explained in the MPR.

It’s nice when a mortgage tips over to 50%-50% principal/interest – makes you feel like you’re getting somewhere…good dog, can you imagine signing the new agreement with the bank on a 35/40yr amortization…knowing each and every monthly is paying 0% towards principal. If there’s more price slippage and you become underwater…you must write a cheque to the bank to cover in order to sell it. Geez!

Tunnel, no light.


#141 Flop… on 03.07.23 at 8:13 pm

#126 crowdedelevatorfartz on 03.07.23 at 7:11 pm

Ahhh to experience the 80’s again.
Gals with big hair, shoulder pads, 20 minute workouts…. politically incorrect music….. bliss.


Hey Crowdie, I’ve been working with a religious fella lately, he normally controls the radio dials, but yesterday he said to me to pick a station.

I innocently put it on Jack FM.

Not long after that the “Your daddy don’t know, What your mama’s gonna do tonight” song came on.

He glanced over at me and said, what the heck is going on in this song…


#142 crowdedelevatorfartz on 03.07.23 at 8:15 pm

@#127 Faron’s Far Friends
“…a prominent, highly successful icelandic …..”


There are prominent Icelanders?
Herring jugglers?
Seal skinners?
Volcano voyeurs?

#143 kommykim on 03.07.23 at 8:16 pm

Watching Tiff deal with inflation is like watching the Ottawa police deal with the Freedumb Convoy.

#144 Bison on 03.07.23 at 8:18 pm

Raise it to 10%.

I am so sick and tired of watching everyone around me living way beyond their means on borrowed money.

Honestly, how many people in Winnipeg can afford to drive a new Mercedes?!?!?

Apparently allot! 10% would straighten those people out quick.

#145 Science Fact on 03.07.23 at 8:22 pm


#146 the jaguar on 03.07.23 at 8:32 pm

@130. Ok kiddo. Roger that. Guess we’ll see how it all shakes down.

#147 Mrs. Smith on 03.07.23 at 8:35 pm

#43 Displaced Canadians on 03.07.23 at 4:11 pm

They changed the article at your link. It’s now about how the weather effects companies. Surreal, propaganda about muh climate change is everywhere all the time.

I think they’ll raise a quarter point tomorrow.

#148 Chris on 03.07.23 at 8:40 pm

So help me with this math. The big banks set aside 2.4 billion for mortgage write-offs? When lots of mortgages are around a million? So they’re writing off like 2,400 houses?

#149 Unpinned on 03.07.23 at 8:40 pm

Cuba is a favorite sun destination for most Canadians which is a good thing…now that most of us cannot afford a new car or even a used car due to the “covid pricing”. We all enjoy the 1950 and 1960 models the Cuban taxis encourage and probe to keep going but for many Canadians this will provide inspiration to keep our gas guzzlers long after the Liberals have left Ottawa.

#150 Science Fact on 03.07.23 at 8:59 pm

#131 Hookshott on 03.07.23 at 7:21 pm
#33 Ed on 03.07.23 at 4:02 pm
Well this is uncomfortable…

Oxford’s Tom Jefferson, the lead author of the Cochrane review, summed up the real science on masks: “There is just no evidence that they make any difference. Full stop.”
So he would be okay with his surgeon not wearing one while doing a knee replacement on him? (or maybe a brain replacement!)


At least let me point this guy to learn the difference between bacteria and viruses – for his surgeon question.


#151 Another Deckchair on 03.07.23 at 9:01 pm

What would I do?

Garth – you are the leader. Me? I just sit watching the world go on its’ merry way. I’m not a born leader like you.

I’d do what my wife and I have always have tried to do in our adult lives – live beneath our means.

It’s ALWAYS easier to spend than earn, so if you an lower spending while good money comes in, you have zero money worries, which equates to a less stressful life. I’m back working making good coin for a bit because I enjoy it, and it keeps the mind going.

(ok, got to do it…it’s my 2023 mantra) Dump the $150k F150! Forget the evil 100k Tesla EV!! Walk and cycle, keep yourself in good health, pat as many dogs as you can, and enjoy every day.


#152 Al in Ottawa on 03.07.23 at 9:07 pm

Ban amortizations over 25 years.

Make it illegal for the banks to allow borrowers to go over 25 years. Force the borrowers to pony up $$ or sell on the open market.

Without this, it just delays the inevitable.

#153 kommykim on 03.07.23 at 9:15 pm

RE: #148 Chris on 03.07.23 at 8:40 pm
So help me with this math. The big banks set aside 2.4 billion for mortgage write-offs? When lots of mortgages are around a million? So they’re writing off like 2,400 houses?


It’s not like the house is going to zero. So if a house mortgaged for a million goes into default, then is sold and nets $800k, the bank is out $200K. The $2.4B would cover 12,000 of these… Not 2,400.

#154 neptunian on 03.07.23 at 9:18 pm

well, apparently those who rushed in to RE in past 2 months after was told that the rate increase will be on hold didn’t take the lesson from those who bid the RE price to all high time in 2021 after was told that rate will stay low at least until end of 2023…

who assured them???

#155 Tony on 03.07.23 at 9:20 pm

Re: #56 john on 03.07.23 at 4:26 pm

Just buy long term corporate bonds or long term strip bonds where the yields have spiked the past couple of weeks.

#156 Armpit on 03.07.23 at 9:26 pm

If Tiff doesn’t raise the rates by .25 tomorrow (to save face), he will move it .5 the next round. Tomorrow will indicated whether he is T2’s puppet or not.

#157 Alois on 03.07.23 at 9:27 pm

BC ??

Is just hunky dory……….

We are up from 6 overdose deaths a day
….to 7 overdose deaths a day.

Hail ” Worker Paradise Party ”
aka NDP !!!!

(FYI: That hole in ozone layer is NDP blowing smoke up ying yang of 5+million BC citizens)

#158 Doug t on 03.07.23 at 9:29 pm

#126 fartz

20 minute workout bliss – but i never lasted that long

#159 GreaterFoolCanadian on 03.07.23 at 9:30 pm

This is what happens to banana countries. It was fun while it lasted.

#160 crowdedelevatorfartz on 03.07.23 at 9:32 pm

@#141 Floppie

You should play Madonna’s ‘ “Pappa don’t preach…(I’m in trouble)”

That should earn you a harassment claim.

#161 Wrk.dover on 03.07.23 at 9:34 pm

Check this one year score board during Tiff:
My home; down
My currency; down
My stocks/ETF’s; generally down
The bonds and preferred shares I DUMPED at loss; sort of worthless relative to food
The tractor and car I bought less than a year ago, up 20%

#162 Cheezcy on 03.07.23 at 9:48 pm

Tiff should resign and take responsibility, then the next dude can jack the rates big time, blaming the previous Tiffster regime for the cock up. Garth you are the man for job…anyone second the nomination

#163 McLatch on 03.07.23 at 9:52 pm

Rates should have been raised a long time ago! The majority of people that benefited from the low rates of the last decade are the financially savvy and the speculators that took risks and blindly benefited from inflated assets due to the cushion of cheap loaned money. Even when you were wrong at least the financial pain was mitigated by low rates and since markets rise 70% of the time you could tread water until you recovered.

There is now a cult of real estate in this country because anybody who got in made money predominantly due to the tax structure we have around real estate that supports speculation that was cushioned by cheap money.

It has distorted our society. When I was young my cohorts were interested in travel and adventure! Now all the young people I know all they want is real estate and who can blame them? It’s been viewed as a sure way to financial independence and is the new form of freedom.

There are so many ills in our society created by the lust for real estate gains. Why do you think all these tent cities are popping up in EVERY community? Because there is no more cheap places to rent. Even crappy apartments are costing way beyond what a regular Joe/Jane could afford.

I don’t have the solution for the predicament we now find ourselves in, but what I know is the path we are on does not lead to prosperity when so many have been left behind.

#164 yvr_lurker on 03.07.23 at 9:58 pm

#158 McLatch
Can I buy you a beer. You have highlighted the predicament in such a good way. I fully concur (although Garth would say we are wrong again).

#165 tkid on 03.07.23 at 9:59 pm

Rip off the band aid, but make it clear to the Canadian masses well in advance that more hikes are coming.

With war a’coming, Tiff may be between the hammer and the anvil. But inflation isn’t going anywhere but up.

#166 WTF on 03.07.23 at 10:11 pm

#67 SW

“We are in the process of moving in central Burlington and have viewed two houses for rent. Both 3 bed / 2 bath, finished large basements, newly renovated with big backyards. Nice places. Rent is $3800/month each.

Now if we were to buy, the MV for these houses is probably around 1.3 million. Put 500k down, and a 800k mortgage at 5.7%, yields a monthly payment of 5k plus taxes, maintenance and insurance, we are looking at 6k/month. And that is assuming 500k down! Most people could not come up with that. Especially under 40’s without mom’s support.”


You must have been absent for Professor Turner’s erudite lectures on this very subject.

The lost opportunity of the 500k DP invested @ 6%

Now $8500 cost per month owning VS $3800 renting.

Acceptable when property increases romp ahead. Quite a difference when they don’t.

#167 other guy in Vancouver on 03.07.23 at 10:12 pm

What would you do?

Protect the innocent.

#168 T-Rev on 03.07.23 at 10:37 pm

@ #104 BCWally: Nailed it. We’re too focussed on all the wrong things….symptoms as opposed to the disease. We need real economic growth, as opposed to house trading. The current system artificially incentivizes too much capital to non productive activity. We need economic growth, not more housing schemes that do. I thing but drive up demand and price.

#169 the Jaguar on 03.07.23 at 11:15 pm

#93 Neanderthal Ned on 03.07.23 at 5:36 pm
Oh Garth… You are so charming. At least to the Neanderthals who roam and forage on this prehistoric blog.

Provisions for losses? Where do you think that money will end up. That’s right… Into shareholders’ earnings in a few quarters. It’s not a loss… But merely an accounting adjustment as I’m sure you know. Like the Canadian big banks will all go under… NOT!

But really, I’d like to hear from your readers on this. Lets listen to what they have to say.+++

How about this? There are ledger book entries, magic accounting, and annual or quarterly statements that most never bother to read. But trust and reputational risk are everything. Good stewardship, competence, and never ever getting broadsided to the tune of 2.4 billion whether or not insurance policies are in place of one sort or another. And yes, national pride at stake. Where are the Scottish border collies when they are most needed?

#170 carmen myranda on 03.07.23 at 11:29 pm

Canada will sit tight and watch the states and wait for data over the next month.
should the Can. Buck drop below 70 to the U.S. it is a short period of time if you look at history – several months or a year. nothing in the scheme of things. more goods sold abroad, less goods purchased here from abroad (maybe).
would love to see rates above 12% then i can set up a nice annuity for my self.
will it happen? maybe down the road a few years.

#171 Blog Dog Joe on 03.07.23 at 11:29 pm

Rip the band aid off and go for a 1% increase or sit on our hands?

Fish or cut bait, lol?

Why not go for the great Canadian compromise between those extremes and just raise a quarter point?

No shame in copying the Yanks, Tiffy, old boy. There ya go now! Crack on! :)

That was as constructive as I can muster at this late hour.

#172 Nonplused on 03.07.23 at 11:40 pm

If Powell moves, I don’t think Tiff has a choice. The tail doesn’t wag the dog.

Been watching the gold price? It’s at $1814 today, pretty lackluster, but probably reflective of an upcoming rate hike at the Fed. In Canadian Pesos? $2498. That, my friends, is a near tragedy. It affects the price of everything at Costco, including the lettuce. It’s a sort of pain the average Canadian cannot afford. Especially if he’s got a mortgage that’s gone into negative amortization.

So ya, if Tiff raises rates, those people who thought “variable forever, and buy as much house as you can afford” are going to suffer. But how many people are we really talking about? Is it 20% of the population? 30%? But high inflation affects everybody. Even the renters, who aren’t to blame for this mess. And what, exactly, do the renters owe the real estate specuvestors? I’m thinking about as much as the plumbers owe the college students who got all strung out on student loans in a country where tuition is dirt cheap, relatively speaking. Pretty much nothing. I mean, it’s hard not to feel sorry for them, but hey man, times are tough all over. A man has got to look after his own first.

I feel sorry for Tiff though. Rates aren’t going to be enough. Trudeau/Singh have a plan to raise taxes! Because the problem is obviously that people aren’t paying enough! They will then forecast higher revenue that will not materialize due to the laws of economics, and go ahead and spend the money before they have it, on things that eventually create a new class of grifters and thus become structural. So it doesn’t matter what Tiff does, he’s fighting an uphill battle, because he has no control over monetary policy. But he can’t just throw in the towel either. He’s going to have to follow the Fed. So he is screwed either way. Let’s hope he does the moral thing and at least saves the loonie. Collapsing currencies collapse societies.


So why won’t taxes raise government revenues? Well, it’s pretty straight forward for several reasons. The first is that there isn’t anything left to tax. If you raise taxes here, there’s less money for people to spend there, and thus less taxes to collect there. All they can do is move the point of taxation around at this point, and slow the economy down in the process.

But the second more impactful reason is human nature, which is the basis of economics. It is known that when something is more expensive, demand falls. It is put to good effect (sic) in the case of sin taxes: Tax the heck out of cigarettes and booze and demand will fall. But those same forces also apply to labor. People are motivated to work for the money. Take the money away, and they quit working. Once that happens, economic contraction is assured.

So there is a certain application of the law of diminishing returns to be found in taxes as in all things, where as you go up the curve people are still willing to work for the money, but less and less enthusiastically, until you reach a point where it isn’t worth it for them to get out of bed anymore. We are already there. And you work to live, you don’t live to work. So unless an hour working is worth more to you than an hour walking the dog, people are going to walk the dog.

It’s really simple folks; whatever you tax more, you get less of. It doesn’t matter what, it applies to all things. Tax cigarette? People smoke less. Booze? They make their own. Labor? They stay home. Investments? They don’t invest. Higher incomes as in say the professional class? They don’t go to school. It applies to all things.

It even works in reverse. Subsidize something and you get more of it, even if there is no economic benefit. Here we can look at solar panels in Calgary. I mean seriously? There is no sun for 5 months of the year! Maybe they work in Arizona or Mexico, but not here. But throw in a subsidy, some financing, and free backup power at night, and suddenly they are popping up everywhere! What a waste. And it’s a double waste, because the extra demand makes it impossible for people in Africa to afford them, whereas they might actually be able to use them. But it’s a government program, so the only surprising thing is that they aren’t trying to put the panels on the dark side of the moon!

(Yes, I am aware that the “dark” side of the moon gets a lot more direct sunlight than Calgary does in the winter. It was a joke! Sheesh.)

#173 Nonplused on 03.07.23 at 11:43 pm

* Sorry, I meant Tiff has no control over fiscal policy. Monetary policy is his to control, whereas Trudeau/Singh got fiscal policy by the balls and they are squeezing hard.

#174 Summertime on 03.07.23 at 11:48 pm

A rhetorical question:

How can inflation in US be higher than in Canada and at the same time the US dollar appreciated against the loonie by 10 % in a year? Would not the cost of imports, significant part of the consumption here be increased by at least 10 % (international trade is done in USD), driving the inflation in Canada much higher than that in US?

And if that is the case why CPI numbers in Canada is lower? What am I missing here?

On the rates – as I keep repeating, it we are to fight inflation, rates should probably go much higher.

The CB primary job is to fight inflation. This can’t happen with negative real rates and hot job market.

BoC is supposedly ‘monitoring the situation’ and ‘analyzing the data’.

The data clearly says that in order to have positive real rates and suppress the job market, rates should go much higher.

On the debt:

The current levels of debt – private and public were incentivized primarily by low rates, zero bank reserve requirements, purchase of MBS and bonds. This was entirely central bank deeds and choices and they should be hold accountable for it.

On the CHMC insurance and the financial regulators:

How can the insurance and regulator legally allow such easy extension of the amortized period of the mortgage?
This clearly indicated stress in servicing the debt (most likely qualifying as practical default/inability to make payments based on the initial duration) and constitutes much higher risk at the expense of tax payers. Should not that be a subject of reassessment and repricing? Higher risk drives higher cost/rates, it is the basic foundation of the insurance business?

Clearly the current debt situation is result of pointed policies both by CB and authorities that now result in much higher debt that renders BoC incapable of following the Fed rate raises.

This translates into weaker currency, higher cost of imports, much higher inflation and capital flight out.

These trends were clear and now could only be exacerbated.

What is worrying here is that despite these clear trends our statistics somehow manages to show weaker vs. much stronger inflation, this is alarming putting into question the integrity of statistics.

Then we add the inconsistencies between statements and actions by central banks and it could become more alarming. We also have the communication issue which implies wishful thinking beating reality. Again and again.

The rate difference with US can not be kept wider as this continues to further fuel weakening currency, makes import more expensive and feeds by strongly positive loop inflation further, so increasing the needs to further increase rates even higher.

I.e. the quicker we stop raising rates, if the Fed keeps raising (and they should in order to stop inflation from further rising as otherwise it will kill their credibility and they care about it, not like the central bank here)
the more rates would need to be increased later.

Caught between a rock (granite) and a very hard place.

And the CB should forget the 2 % target, the more they keep repeating that impossible (for a long time) goal, the more their remains of credibility sinks.

If they were serious about the 2 % mark, rates probably should have been in double digits already, making it higher than the real inflation of necessities (food, rents, services, double that of the official CPI).

#175 Doug t on 03.07.23 at 11:49 pm

#163 Mclatch

AMEN BROTHER- we have screwed this country over and far too many suffer for it

#176 Maxime on 03.07.23 at 11:56 pm

I would be okay with rates going up. And understand the necessity. Not an expert, just an ordinary person.

#177 Beavis on 03.08.23 at 12:07 am

Raise rates by a quarter point and perhaps again at the next meeting after looking at the data.

How much blame do the government deficits / policies get for this mess? Not enough. Hard to fix the mess when the Libs press the gas pedal and CB press the brakes at the same time.

#178 Jon B on 03.08.23 at 12:19 am

Crank it up.

#179 Two-thirds on 03.08.23 at 12:20 am

Tiff will not make a decision based on the value of the currency. As stated in the BoC monetary policy page (https://www.bankofcanada.ca/core-functions/monetary-policy/):

“The objective of monetary policy is to preserve the value of money by keeping inflation low, stable and predictable. This allows Canadians to make spending and investment decisions with more confidence, encourages longer-term investment in Canada’s economy, and contributes to sustained job creation and greater productivity. This in turn leads to improvements in our standard of living.

Canada’s monetary policy framework consists of two key components that work together: the inflation-control target and the flexible exchange rate. This framework helps make monetary policy actions readily understandable, and enables the Bank to demonstrate its accountability to Canadians.

Canada’s flexible exchange rate

Canada’s flexible exchange rate, or floating dollar, permits us to pursue an independent monetary policy that is best suited to Canada’s economic circumstances and is focused on achieving the inflation target. Movements in the exchange rate also provide a “buffer,” helping our economy to absorb and adjust to external and internal shocks.

Understanding exchange rates

The foreign exchange market determines how much the Canadian dollar is worth. At the Bank of Canada, we very rarely intervene to support its value.

Also, it is worthy of note that according to the BoC, rate setting actions take time to take effect, so Tiff would be amply justified in waiting. From the same policy page (emphasis added):

“Monetary policy actions take time

Monetary policy actions take time – usually between six and eight quarters – to work their way through the economy and have their full effect on inflation. For this reason, monetary policy is always forward looking and the policy rate setting is based on the Bank’s judgment of where inflation is likely to be in the future, not what it is today.”

Has it been 6-8 quarters since the current 4.5% level was set?

Note that the rate setting decision is based on “where inflation is likely to be in the future, not what it is today” – straight from the BoC’s mouth/page.

So no, February’s inflation reading will not be the key factor in Tiff’s decision for April, 2023’s rate announcement. It will rather be the expected inflation figure 6 quarters from Q2, 2022, if BoC is to be believed.

#180 Balmuto on 03.08.23 at 12:23 am

It’s time to be cautious and re-assess as the variable rate mortgage situation is very troubling. We haven’t seen the full impact of the interest rate shock yet. Consequences could be a lot more dire than the inflation we’re seeing. Not a good idea to add more fuel to the fire.

So my advice to Tiff is, “Don’t just do something, stand there!”

#181 fishman on 03.08.23 at 12:26 am

Lets focus on the county most genetically similar to Canada (Russia) to see what we’re doing right, (or wrong). Since 2011 their CB focused on bringing inflation down. Tightened monetary policy by running interest rates at 5% above inflation. From 2014 to 2023 Russia increased its gold holdings from 30 million oz. to 75 million oz. Their decline of GDP in 2022 was 2.1%. IMF projects their GDP growth in 2023 at .3%. Last year their inflation was 11.1%year, the big surge in the first quarter of 2022. Month over month lately the inflation rate is flat. CB Chairman(woman?) has Russia moving from inflation reduction to prioritizing economic growth in later 2023. Loosening monetary policy & accelerating economic policies. Meaning get that war machine a humming. Russia with a yearly GDP of 1.5 trillion is at war with GDP’s totalling 37 trillion. But the ruble is floating. Any funny money will show up pretty fast. Russia has successfully bypassed Swift, MasterCard & Visa & has their own internal payment systems plus whatever shenanigans goes on with exports. The boys are pretty positive that a xxx tanker registered from xxxxx was pumping out Russian jet fuel in Burnaby a month ago. At the very least my bloggie doggies get used to the word “blended”.
It will be worthwhile following their economic trajectory.
We did in Bolshevik days & found their system wanting. Maybe debt does matter. Russia carries a debt to GDP ratio of 17%, Canada is around 100% & Japan is 260%.

#182 Waltza Wight on 03.08.23 at 1:39 am

When bankers go bad…..Garth you may have hit on something here, I smell a hit TV series in here, Banking Bad, about a rogue banker dying of a terminal disease who then decided to set up an illicit drugs empire to fund his mortgage payments

#183 Humble on 03.08.23 at 3:14 am

6-7% in the US by year end? The $C fell a full 1% overnight. That’s a rout. That’s the world telling our Liberal Party it won’t be investing in Canada. There’s no catalyst to buy $C. There’s only one direction.

The market will be 100% short. BOC will have to intervene unless they want a cascading collapse. Already the grocery prices are up. Transport fuel is up, so is the grocery prices. The more volitile perishable fresh produce is priced daily.

The wholesale price is the canary in the coalmine. Trudeau jacking up carbon tax 309% in April means nat gas run green house produce will jump higher virtually overnight.

I’m sure Mr Trudeau needs to distract from his current China bribery scandal , but if groceries jump again in April his excuses won’t fly, even in the NDP camp. How is this actionable? What’s the flight to safety here?

If the Tiff-Trudeau- Butts brain trust can’t raise rates in lockstep to Powell it’s a political move not economic. It’s very very cynical to engineer a countries failure. My call….get out of Canada …quick.

#184 Humble on 03.08.23 at 4:12 am

Quad. Aus-US- Jap- Ind and now S. Kor. Is Trudeaus China scandal the reason for the absence of Canada?

#185 As If on 03.08.23 at 4:36 am

It’s amusing this is even being framed as a “choice”.

Canada is the sub, the market-taker in all areas. He raises or everyone loses even more.

The fact it’s even in doubt is just one more reason Canada will always be the US’s female dog.

#186 under the radar on 03.08.23 at 5:21 am

Down the dollar goes which imports more inflation. Tough spot for the wheelman. Stone crab at Joe’s just got more expensive. Must follow the Fed.

Home featured in G&M for 3.5 last week , sold in a flash. Another client listed Monday, 4.5 DT core, beautiful product with little new inventory in this snack bracket.

#187 Steven Rowlandson on 03.08.23 at 7:31 am

Evidently both borrower and lender can’t accept truth and face reality. Does that make them both insane and possibly criminal? I suspect that it does. Either way it doesn’t look good at all.

#188 Don on 03.08.23 at 7:43 am

#154 neptunian -“who assured them???’


#189 Miserable Boomer on 03.08.23 at 8:12 am

20, 21, 22, 23. Year after year inflation. What was a buck is now a buck 25. This itsy bitsy 25/30% per year might not be much for us rich dogs directly but it means the poor guy goes from beans to sleeping in a box, and…your million gets wiped out faster than planned for. Be nice to the people in the food bank you see on the street, because you might meet them in person in a few short years. Doesn’t Tiff Trudeau get it? Ate Liberals too preoccupied with China to see the crap hitting the fan?

#190 Victor V on 03.08.23 at 8:14 am

Monthly Power of sales continue their uptrend

Up 437% since February of last year

But still less than 1% of total inventory:


#191 the Jaguar on 03.08.23 at 9:08 am

NP Snippet: This is what the ‘Regulator’ is up to while Rome burns:

“• Canada’s large banks and insurance firms will have to run stress tests and disclose key aspects of their plans to manage climate change risk by the end of next year, according to guidance issued Tuesday by the Office of the Superintendent of Financial Institutions.

Following a months-long consultation, OSFI laid out a framework for financial institutions to manage and disclose the physical risks posed by climate change as well as the risks to their business lines from a transition to lower-carbon economies.”

#192 Dharma Bum on 03.08.23 at 10:12 am

We will follow the FED.

Maybe not right now, but you can bet your bottom dollar that when the FED bumps her up in a couple of weeks, the CB will make up for the current pause.

We always follow. Canada is a follower.

We like to “make pretend” that we are an independent nation. It’s good for morale and patriotism.

However, realists know that we are just Uncle Sam’s beeeeyaaaatch.

Poutine eating hicks.

#193 You can bank on this! on 03.08.23 at 10:15 am

#169 the Jaguar on 03.07.23 at 11:15 pm
#93 Neanderthal Ned on 03.07.23 at 5:36 pm
Oh Garth… You are so charming. At least to the Neanderthals who roam and forage on this prehistoric blog.

Provisions for losses? Where do you think that money will end up. That’s right… Into shareholders’ earnings in a few quarters. It’s not a loss… But merely an accounting adjustment as I’m sure you know. Like the Canadian big banks will all go under… NOT!

But really, I’d like to hear from your readers on this. Lets listen to what they have to say.+++

How about this? There are ledger book entries, magic accounting, and annual or quarterly statements that most never bother to read. But trust and reputational risk are everything. Good stewardship, competence, and never ever getting broadsided to the tune of 2.4 billion whether or not insurance policies are in place of one sort or another. And yes, national pride at stake. Where are the Scottish border collies when they are most needed?


How about this?
A nearly impeccable track record, some spanning over more than a couple of centuries.
A stellar reputation on the international banking industry.
Barely a blip during the most recent recession and pandemic while other countries’ banks floundered or failed.
Average 13% returns (CAGR) over last 28 years.
A significant portion of uninsured mortgages on their books.

As for Scottish border collies, they were too busy protecting the now defunct Bank of Scotland!

#194 Max Prophet on 03.08.23 at 10:23 am

#1 Alois on 03.07.23 at 3:13 pm
Think I will start my own bank…

Can’t be that hard….

(Free toaster with every deposit over $1 Million !!! )


Might I suggest a grocery chain instead. They are considerably more profitable and hunger doesn’t care about interest rates.

#195 the Jaguar on 03.08.23 at 10:30 am

#193 You can bank on this! on 03.08.23 at 10:15 am++

You missed the point. In no way am I worried about the ancient warrior banks or their future. But 2.4 billion ain’t chump change and should require examination.

Share your comment:

• All comments are held a short time for moderation before being published. Please submit only once!
• Respectful, wide-ranging discussion on the topic of the posting is encouraged, and will not be censored.
• Abusive, obscene or disrespectful commenters will not be published, and are subject to banning from this forum.
• Please avoid pasting the text of excessively long articles or news stories within your comment — provide a link to the item instead.