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Rising Interest Rates Ahead

Rising Interest Rates Ahead

February 8, 2022

The Bank of Canada continues to sound the alarm that higher interest rates are just around the corner.

There are two significant reasons why.

One. Inflation, as measured by the consumer price index had an annual increase of 4.8 per cent in December. This is the highest level in three decades. The target inflation rate is between one and three per cent.

Two. Real estate prices continue to soar. Houses in Canada have appreciated 43 per cent in the last two years. Smaller communities in Ontario have had higher increases in value.

House values in London, Cambridge, Barrie, and Brantford have appreciated 70 per cent. Houses in Oakville have appreciated 57 per cent during the same two-year period, according to the Canadian Real Estate Association.

It’s time for the Bank of Canada to do its job and that is to slow down economic activity and return to more stable and sustainable growth rate.

This will happen and the focus of our attention will immediately shift to the many that are overextended and find higher interest rates unaffordable. Necessary for the economy but painful for many individuals.

The next scheduled date that interest rates could change is March 2, 2022. The consensus is that there will be several rate-increases over a short period of time.

Our suggestion is to spend a little time looking at your personal finances.

Can your cash flow absorb higher interest rates? What changes will you have to make when interest rates rise?

Interest rates will rise. The time to address this reality is now.

Peter Watson is registered with Aligned Capital Partners Inc. (ACPI) to provide investment advice. Investment products are provided by ACPI. ACPI is a member of the Investment Industry Regulatory Organization of Canada. The opinions expressed are those of the author and not necessarily those of ACPI. Watson provides wealth management services through Watson Investments. He can be reached at