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Originally Posted by Tapioca
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We're basically in lockstep with the rest of the world. US printed +8.5% year-over-year last week. According to WSJ, "
Inflation is now over 5% in 58% of advanced economies and over 7% in 55% of emerging economies. This isn’t all due to energy: inflation excluding energy has also accelerated widely."
Based on the BoC's commentary after the April meeting, markets are fully pricing in a 0.5% hike in June, and a total increase of +2% by year-end. Governor Macklem emphasized the need to normalize policy relatively quickly to keep long-term expectations anchored and BoC has become more concerned about the “increasing risk that expectations of elevated inflation could become entrenched”. Goldman, for example, is forecasting 0.5% hike in June, July, and Sept consecutively. Not going to be a a fun time for variable mortgage holders.
This probably belongs more in the stocks thread but Netflix cratered 35% today wiping out ~50B USD in market value. Why? because for the first time since 2011, they lost paid subscribers overall and the company forecasts to lost another 2m subscribers next quarter. I think this type of cost-trimming is going to become more common as cost of living keeps increasing. Less going out to eat and drink, cutting unnecessary subscription services, less spend on art (concerts, movies etc.), less travelling, etc. None of that will bode well for our economy especially when the service sector makes up 70% of Canada's GDP.
Bottom-line, inflation is rampant worldwide and there is very little that we can do about it locally. BoC also has to react and respect what the markets are pricing. Some folks have the view that somehow BoC will do whatever it takes to save the real estate market because god forbid people lose money in RE. Nope, that is not how central banks operate and even if they tried something like that (i.e. let inflation run rampant by refusing to raise rates), it would be even more catastrophic to our economy long-term.