It’s been an interesting week in the financial world. The Bank of Canada raised its policy lending rate to 1% and, of course, the big banks didn’t wait to raise their prime lending rates as of yesterday to 3.2%. Heaven forbid they see any drop in their multi-billions worth of quarterly profits. Better to have working folks hand over more of their paycheques to have a roof over their heads.
Another interesting situation from this layman’s point of view is that the Bank of Canada says recent economic data shows growth in Canada is becoming more broadly-based and self-sustaining. Consumer spending remains robust, underpinned by continued solid employment and income growth. The Canadian dollar is above 80 cents U.S. So, why has our stock market been dropping? I would bet many small-time investors working toward retirement are scratching their heads as they watch their portfolios dragging their heels in the face of all the “good” economic news. Does it have something to do with big corporate investor jitters caused by the North Korean situation or some such? Whatever it is, it can be frustrating for ordinary people to watch expenses rise, savings fall while being told how great things are economically and how wonderful banks are doing.