This week’s episode is all about how the economy maintains good order and balance. On Wednesday, the Bank of Canada increased the overnight rate from 0.25% to 0.50%, the first rate increase since 2018. How does this impact inflation? How does it impact the Canadian people? Have a listen to the episode to find out! Here is what you can take away from this episode:

1. Will this rate hike solve our inflation problems? Probably not. When interest rates increase, the impact that has on an economy isn’t realized for 12–18 months. Consumers were so tight for cash during COVID though, and many of them still are, that this was not a possibility last year. The Bank of Canada will spend the next few years hiking interest rates at a steady clip to see where the proper balance is of fighting inflation fears vs. those of a bear market.

2. Energy policy has a huge effect on foreign policy. Energy is a valuable resource. Every country has a vested interest in it’s cost and accessibility. Some countries are mass producers of energy, while others rely on importing it to keep their economies afloat. When inflation leads to a skyrocketing cost of energy, countries pay attention.

3. We still love the variable rate. The fixed rate has been pumped up by talks of 6, maybe even 8 interest rate hikes in 2022, so if the year continues and we find we aren’t on pace to reach those marks, the fixed rate should come back down a bit. The variable rate is still at such a huge discount to prime, so we feel that if you are okay with taking a bit of risk, the variable rate looks really good.