Widow looking for answers after Quebec man dies in Texas Ironman competition
The widow of a Quebec man who died competing in an Ironman competition is looking for answers.
The Bank of Canada hiked its key interest rate by a quarter of a percentage point Wednesday, bringing it to 4.5 per cent -- the highest it's been since 2007.
The increase marks the eighth consecutive rate hike since the central bank began raising from near-zero in March.
The Bank of Canada said Wednesday that it expects this to be the last rate hike of the cycle.
The rate hikes are intended to reduce stubbornly high inflation, which peaked over the summer and has been steadily declining since, but many economists feel the shock to the economy could lead to a recession.
Here's a look at what the rate means, how analysts are interpreting it and what it could mean for consumers.
What is the key policy rate and what does it do?
The key policy rate, also known as the target for the overnight rate, is how much interest the Bank of Canada wants commercial banks to charge when lending each other money overnight to settle daily balances.
Knowing how much it costs to lend money, or to deposit it with the central bank, helps set the interest rates charged on things like loans and mortgages.
Lowering the rate generally makes borrowing money more affordable, while raising it makes such activities more expensive.
Why is the bank using the rate to target inflation?
Inflation is a measure of how much the prices of goods and services are rising or falling. High inflation is a sign of an economy that's overheating.
Canada's annual inflation rate reached a peak of 8.1 per cent in June, the highest level in four decades.
It has eased since then, reaching 6.8 per cent in November and 6.3 per cent in December. And shoppers have seen even higher price increases for common expenses like groceries. Grocery prices have been rising at the fastest pace in decades and were 11 per cent higher in December than they were a year ago.
Economists and the central bank want to see a further easing of inflation, which is why interest rates have been rising so quickly in the hope of cooling consumer spending patterns.
"Inflation is still too high and short-term inflation expectations remain elevated," the bank said in its most recent announcement. "The longer that consumers and businesses expect inflation to be above the target, the greater the risk that elevated inflation becomes entrenched."
What does this mean for my mortgage?
Mortgage rates tend to increase or decrease in tandem with interest rates.
When Canadians buy homes there are two kinds of mortgages they can select -- fixed rate or variable. Fixed-rate mortgages allow borrowers to lock in the interest rate they will pay for a set amount of time, while variable-rate mortgages can fluctuate.
After the Bank of Canada's rate hike on Wednesday, prime rates can be expected to rise to 6.7 per cent and variable rates will be set at about 5.75 per cent and above, said Leah Zlatkin, a mortgage broker with LowestRates.ca.
Assuming their mortgage has a 25-year amortization and they had a 15 per cent down payment, she said a homeowner with a variable mortgage rate of 5.45 per cent on a home priced at $700,000 will have a monthly mortgage payment of around $3,716.
The same mortgage at 5.7 per cent will see monthly mortgage payments increase to about $3,805, a $89 jump per month, she added.
"This will put greater pressure on an already struggling housing market," Zlatkin said in a news release.
"For homeowners in Ontario who are seeing increased property taxes in addition to rate hikes, it's likely this will be the worst squeeze homeowners have felt yet."
Does this mean interest rates will stop rising?
"We've raised rates rapidly, and now it's time to pause and assess whether monetary policy is sufficiently restrictive to bring inflation back to the two per cent target," Bank of Canada governor Tiff Macklem said at a news conference Wednesday.
His remarks are making analysts believe the hikes are done, but Macklem has left the door open to future raises, if inflation doesn't budge as much as he'd like.
Sherry Cooper, chief economist with Dominion Lending Centres, interpreted Macklem's remarks to mean that no rate hike is likely on March 8 or April 12, giving prospective homebuyers hope after months of holding off on purchases.
She said, "This may lead many to believe that rates have peaked so buyers might tiptoe back into the housing market."
This report by The Canadian Press was first published Jan. 25, 2022.
The widow of a Quebec man who died competing in an Ironman competition is looking for answers.
Facing pushback from physicians and businesspeople over the coming increase to the capital gains inclusion rate, Prime Minister Justin Trudeau and his deputy Chrystia Freeland are standing by their plan to target Canada's highest earners.
Former NDP leader Tom Mulcair says that what's happening now in a trash-littered federal park in Quebec is a perfect metaphor for how the Trudeau government runs things.
Police are investigating after a transport truck collided with a train in Sarnia.
The world is seeing a near breakdown of international law amid flagrant rule-breaking in Gaza and Ukraine, multiplying armed conflicts, the rise of authoritarianism and huge rights violations in Sudan, Ethiopia and Myanmar, Amnesty International warned Wednesday as it published its annual report.
As some family doctors are retiring and others are moving away from family medicine, there are fewer medical students to take their place.
Individuals being barred from entering Ontario’s legislature while wearing a keffiyeh say the garment is part of their cultural identity— and the only ones making it political are the politicians banning it.
United States authorities who have been searching for a pair of missing kayakers from British Columbia since the weekend have recovered two bodies in the nearby San Juan Islands of Washington state.
A Winnipeg man said a single date gone wrong led to years of criminal harassment, false arrests, stress and depression.
The giant stone statues guarding the Lions Gate Bridge have been dressed in custom Vancouver Canucks jerseys as the NHL playoffs get underway.
A local Oilers fan is hoping to see his team cut through the postseason, so he can cut his hair.
A family from Laval, Que. is looking for answers... and their father's body. He died on vacation in Cuba and authorities sent someone else's body back to Canada.
A former educational assistant is calling attention to the rising violence in Alberta's classrooms.
The federal government says its plan to increase taxes on capital gains is aimed at wealthy Canadians to achieve “tax fairness.”
At 6'8" and 350 pounds, there is nothing typical about UBC offensive lineman Giovanni Manu, who was born in Tonga and went to high school in Pitt Meadows.
Kevin the cat has been reunited with his family after enduring a harrowing three-day ordeal while lost at Toronto Pearson International Airport earlier this week.
Molly Knight, a Grade 4 student in Nova Scotia, noticed her school library did not have many books on female athletes, so she started her own book drive in hopes of changing that.
Almost 7,000 bars of pure gold were stolen from Pearson International Airport exactly one year ago during an elaborate heist, but so far only a tiny fraction of that stolen loot has been found.