Introduction
Thank you for the kind welcome and thank you to the Greater Victoria Chamber of Commerce for giving me the opportunity to be here today. It is always a real pleasure to visit beautiful Victoria.
I live in Vancouver, but I often make the trip across to Vancouver Island to take advantage of the natural beauty here. I love riding the Galloping Goose trail out to Sooke to visit the potholes or hiking the beaches in Juan de Fuca Park. I could go on all day about the wonders of Victoria and the island, but instead-and I hope you won't be disappointed-I will focus my talk on interest rates.
First, I want to talk about the Bank of Canada's decision yesterday to raise our policy rate to 4¾%. I will elaborate a bit on our discussion and the thinking behind our decision.
Then I will take a step back and look at where interest rates may be going two or three years into the future and beyond. I will consider the question of where interest rates are likely to settle once inflation has normalized, and whether we may be entering a new environment of higher interest rates. To do this, I'll explore some of the factors that influenced interest rates in the decades before the COVID-19 pandemic and then discuss why these forces may now be shifting.
