The Bank of Canada has recently raised interest rates from 1% to 1.25% and it may affect your bottom-line.
"I think, like everything in life, there's winners and losers," shared Financial Planner with Spectra Financial, Ron Areshenkoff (CPCA). "If you have a mortgage or if you have a business and you have a line of credit or you have to borrow money to buy materials and supplies, you'll have to pay more for that."
"If you've worked a lifetime and you have savings that you're trying to retire on, you're going to be rewarded and make more money off your savings."
"As far as business is concerned, it has the potential to incur more costs and be a little detrimental to businesses and to people with debts. But savers, people with money will benefit on a higher return on the money they have saved."
He noted that interest rates have been much higher in years past.
"We're in the midst of historically low interest rates and young people today don't have any understanding of what parents and grandparents with 12% and 18% interest rates."
"We've gone through a period where low interest rates have amassed a lot of irresponsibility with personal finances. The cost of debt is going to be very punishing going forward with rising rates."
He added that the trend is to go higher.
"The Bank of Canada and the Feds, they want to keep increasing rates to the degree that the economy and homeowners with debt can bear it. It does a couple things, it creates inflation and it rewards savers who worked a lifetime as our economy is supposed to function in that manner. And also, it gives them a bit of ammunition if we do run into a recession or the economy hits a slow period, they've got some room to lower interest rates to help spur the economy. Right now, there's not a lot of room to lower interest rates if things really toughen up."