Good afternoon everyone! My name is Avril, as some of you may know I’m Joshua’s associate, and I’m back guest writing for this week’s edition of Kingsmill’s Investment Miscellanea (back my poplar demand ;-) ).
For the first time in over a year, The Bank of Canada announced its interest rate update on Wednesday March 8th and decided not to increase it from 4.5%. This is the first pause since March of 2022 when it stood at just 0.5% . It’s been an interesting ride and as many of you are aware of through our previous blogs and conversations, this gave way to new opportunities in products such as GIC’s, with annual-pay rates of up to 4.98% and other fixed income products even higher.
The steadfast approach suggests that policymakers are confident with the consistent tightening that has taken place throughout the last 12 months and that it will continue putting strain on borrowing costs and ultimately ease inflation. The Bank of Canada has pointed to recent data to illustrate the effects of these hikes and the results that are taking shape so far. One key statistic to note is that Canada’s economy did not expand through the last quarter of 2022, and even shrank in the month of December. What’s more, business investment and household spending has also declined. Although this was good news for the inflation rate, the economic stagnation provided a big reason to keep interest rates where they are. We can safely say that the ripple effects of these hikes are being felt and will continue to be reflected into 2023.
The below chart depicts Canada’s Growth Rate (updated beginning of March 2023):
Although these measures to wrestle inflation are having a impact, the bank made it clear in its statement that it is prepared to raise rates even higher than they currently are should circumstances change. Something to look out for and that we will be keeping on our radar when analyzing, making suggestions, and rebalancing portfolios in the next quarter and throughout 2023.
Another thing to keep on your radars is our highly anticipated seminar happening Wednesday March 29th at 4:00pm! “Estate and Financial Planning for Families and Business Owners”. From the feedback we’ve received since introducing these seminars, this was one of our most requested topics. So come one, come all - our expert presenters will be sure to shed light and answer questions on a broad range of topics, from personal and corporate planning, to trusts, and transfer of wealth between generations.
Please click to play/follow the link to see Josh’s first “vlog” and video invite:
To register, click below!
Finally, some predictions this weekend’s Oscars: For best picture I have to go with Top Gun: Maverick. And as a bonus, simply because this movie made my sister and I cry, I’m going to also put in a prediction for Guillermo del Toro’s Pinocchio to win best animated Feature Film.
Have a great weekend,
The Kingsmill Team