How often is the Central Bank allowed to hike up the interest rate?

Oneshot112 wrote: ↑ Here are potential hikes on the horizon on top of today's: https://betterdwelling.com/canadas-top-finance-experts-see-the-bank-of-canada-aggressively-hiking-rates/

Source: Better Dwelling.

Mar 2, 2022 – All experts have forecast a rate hike of 25 basis points (bps) at this meeting. It was an easy call, since the central bank has been implying it will be the first hike. The large cluster of plots makes it clear the forecast will be 0.50% by tomorrow. It’s not always so clear going forward though.

Apr 13, 2022 – The bulk of experts have forecast another rate hike at this meeting. The overnight rate would rise another 25 bps if right, hitting 0.75% by the end of the meeting. Only one panel member didn’t see a rate hike, as the BoC plays a little catch-up on cooling inflation.

Jul 13, 2022 – The forecasts are clustered around the 1.00% mark, implying another rate hike at this meeting. Two forecasts are below this level, but only one sees the overnight rate at 1.00% or higher.

Sept 7, 2022 – The forecasts are split evenly between 1.00% and 1.25%, with only one below the 1.00% mark. Once again, the further out the forecast is, the more difficult it is to make a call, and the wider the range gets. It’s easier to tell what will happen tomorrow than next year. Unless it’s predicting if the Leafs will win the Stanley Cup, then it’s an easy call for any year that they probably won’t.

Oct 26, 2022 – The October meeting is more definitive, with most forecasts agreeing on rates at 1.25%. Two experts are above and two below, but there’s more certainty at this level with 70% of forecasts above the 1.25% mark.

Dec 7, 2022 – No one wants to ruin Christmas or the Santa Rally. The forecasts are still clustered mainly for the overnight rate at 1.25%. We can see expectations climbing though — with another forecast rising.

Jan 25, 2022 – By Jan 25, another round of rate hikes is forecast. More than half the panel sees the overnight rate at 1.50% or higher. Two forecasts are even at 1.75%, the neutral policy rate implying no need for further stimulus. The 0.75% forecast completely disappears as well, as they up their expectations.

Oneshot112 wrote: ↑ Here are potential hikes on the horizon on top of today's: https://betterdwelling.com/canadas-top-finance-experts-see-the-bank-of-canada-aggressively-hiking-rates/

Source: Better Dwelling.

Mar 2, 2022 – All experts have forecast a rate hike of 25 basis points (bps) at this meeting. It was an easy call, since the central bank has been implying it will be the first hike. The large cluster of plots makes it clear the forecast will be 0.50% by tomorrow. It’s not always so clear going forward though.

Apr 13, 2022 – The bulk of experts have forecast another rate hike at this meeting. The overnight rate would rise another 25 bps if right, hitting 0.75% by the end of the meeting. Only one panel member didn’t see a rate hike, as the BoC plays a little catch-up on cooling inflation.

Jul 13, 2022 – The forecasts are clustered around the 1.00% mark, implying another rate hike at this meeting. Two forecasts are below this level, but only one sees the overnight rate at 1.00% or higher.

Sept 7, 2022 – The forecasts are split evenly between 1.00% and 1.25%, with only one below the 1.00% mark. Once again, the further out the forecast is, the more difficult it is to make a call, and the wider the range gets. It’s easier to tell what will happen tomorrow than next year. Unless it’s predicting if the Leafs will win the Stanley Cup, then it’s an easy call for any year that they probably won’t.

Oct 26, 2022 – The October meeting is more definitive, with most forecasts agreeing on rates at 1.25%. Two experts are above and two below, but there’s more certainty at this level with 70% of forecasts above the 1.25% mark.

Dec 7, 2022 – No one wants to ruin Christmas or the Santa Rally. The forecasts are still clustered mainly for the overnight rate at 1.25%. We can see expectations climbing though — with another forecast rising.

Jan 25, 2022 – By Jan 25, another round of rate hikes is forecast. More than half the panel sees the overnight rate at 1.50% or higher. Two forecasts are even at 1.75%, the neutral policy rate implying no need for further stimulus. The 0.75% forecast completely disappears as well, as they up their expectations.

chevyz07 wrote: ↑ I'm getting conflicting information from different people, some tell me that interest rate is allowed to be changed every quarter (3 months), and others are telling me that it can be changed every month.

So first, how often is the bank of Canada allowed to change the interest rate, and how often do they usually change their interest rate regardless of how often they are allowed to do it?

Dejavudiva wrote: ↑ Sounds to me that fixed is probably the safer bet now for buyers.

Spirit2 wrote: ↑ It is not an easy decision to make.

Variable is around 1.25% and Fixed mostly above 2.75%. That means all the predicted rate hikes have to happen for variable to catch up to current fixed rates. We have at least one year if not more until BOC does 6 increases.

I was on the fixed rate for years but currently variable and will still go variable if I had to renew today.

Oneshot112 wrote: ↑ Here are potential hikes on the horizon on top of today's: https://betterdwelling.com/canadas-top-finance-experts-see-the-bank-of-canada-aggressively-hiking-rates/

Source: Better Dwelling.

Mar 2, 2022 – All experts have forecast a rate hike of 25 basis points (bps) at this meeting. It was an easy call, since the central bank has been implying it will be the first hike. The large cluster of plots makes it clear the forecast will be 0.50% by tomorrow. It’s not always so clear going forward though.

Apr 13, 2022 – The bulk of experts have forecast another rate hike at this meeting. The overnight rate would rise another 25 bps if right, hitting 0.75% by the end of the meeting. Only one panel member didn’t see a rate hike, as the BoC plays a little catch-up on cooling inflation.

Jul 13, 2022 – The forecasts are clustered around the 1.00% mark, implying another rate hike at this meeting. Two forecasts are below this level, but only one sees the overnight rate at 1.00% or higher.

Sept 7, 2022 – The forecasts are split evenly between 1.00% and 1.25%, with only one below the 1.00% mark. Once again, the further out the forecast is, the more difficult it is to make a call, and the wider the range gets. It’s easier to tell what will happen tomorrow than next year. Unless it’s predicting if the Leafs will win the Stanley Cup, then it’s an easy call for any year that they probably won’t.

Oct 26, 2022 – The October meeting is more definitive, with most forecasts agreeing on rates at 1.25%. Two experts are above and two below, but there’s more certainty at this level with 70% of forecasts above the 1.25% mark.

Dec 7, 2022 – No one wants to ruin Christmas or the Santa Rally. The forecasts are still clustered mainly for the overnight rate at 1.25%. We can see expectations climbing though — with another forecast rising.

Jan 25, 2022 – By Jan 25, another round of rate hikes is forecast. More than half the panel sees the overnight rate at 1.50% or higher. Two forecasts are even at 1.75%, the neutral policy rate implying no need for further stimulus. The 0.75% forecast completely disappears as well, as they up their expectations.

doobievibes wrote: ↑Don't forget this is the BOC overnight rate, and not the Banks's (TD, CIBC, BMO, etc) Prime Rate.

Just to add another "wildcard" in all this, the Banks may not necessarily follow the BOC rate.

https://wowa.ca/banks/prime-rates-canada

A couple of recent examples to point out (not that recent actually):

BOC rate going down examples:
June 2015 BOC 0.75 to 0.5 (-0.25) Bank Prime 2.85 to 2.70 (-0.15)

Dec 2008 BOC 2.25 to 1.5 (-0.75) Bank Prime 4. to 3.50 (-0.50)

BOC rate going up example:
May 2000 BOC 4.75 to 4.75 (no change) Bank Prime 7.00 to 7.50 (+0.50)

But then Dec 2000 BOC 4.75 to 5.75 (+1.00) Bank Prime 7.50 to 7.50 (no change)

So actually worked out better for borrowers. Just had to stick it out a few months.



Doesn't happen too often (very rarely, actually).

I'm just saying there is hope that even though the BOC raises rates, the bank may not (Yeah right)

chevyz07 wrote: ↑ Why's that? I'm currently at -1.11% variable which puts me around 1.49% interest. I can lock in right now for 3%, and with a 1.5% hike projected this year, and a 1% hike for next year, my variable would be 3% by january 2023. And with it projected to go even higher, does it not make sense to switch to fixed at 3% or lower?

Dejavudiva wrote: ↑ Sounds to me that fixed is probably the safer bet now for buyers.

KanataKG wrote: ↑ Nope, variable remains the safe bet for borrowers.

Fixed is for chumps a.k.a people paying for "peace of mind"