A Conundrum for Canada?

Could it be the higher interest rates rise, the higher inflation goes, and the higher inflation goes the higher interest rates rise?

This may be for a deeply indebted country

Canada’s latest inflation reading shows mortgage interest costs jumped 14.5%, (the largest increase since February 1983) while the rent index rose 5.9% for November 2022. A key component of the Consumer Price Index is shelter. Overall the current CPI reading came in at 6.8%, slightly higher than expected, but a long way from the 2% level its Central Bank seeks.

Canada has raised its benchmark rate from 0.25% in February this year to 4.25% by December. This translates into more and more debt for deeply indebted households.

It’s going to be most difficult and painful for such indebted citizens to shoulder the weight of taming inflation through higher rates.