Much of the discussion in the forum, whether about saving (or borrowing), and the future impact it has, rests in the level of interest rate used to evaluate the future value or the present value of our decisions.

The upheaval caused by the pandemic, lockdowns and then recovery in the global economy prompted dislocation in supply chains, which led to price increases and resulting inflation. This was then exacerbated by Russia's invasion of Ukraine.

Central banks such as the Bank of Canada have been increasing interest rates to try to slow inflation by making it more expensive for companies and individuals to borrow, thus slowing the economy and easing the demand pressures on pricing.

What impact has this had on our propensity to save?

That increase in interest rates has a huge impact on the value of money. We will start to examine this in more detail in Unit 4.

The Bank of Canada manages monetary policy and set interest rates. They are currently at 5% as you all probably know.

Here is the latest explanation of why rates are at their current level and what the next moves might be by the Bank of Canada Governor Tiff Macklem. Definitely worth reading/watching:

https://www.bankofcanada.ca/2023/12/lessons-learned-and-looking-ahead/

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