{"id":15074,"date":"2021-10-15T20:15:12","date_gmt":"2021-10-15T20:15:12","guid":{"rendered":"https:\/\/www.pantheregroup.com\/2021\/10\/15\/if-rbc-ceo-is-right-about-impending-spending-spree-interest-rates-will-rise-sooner-than-expected\/"},"modified":"2021-10-15T20:15:12","modified_gmt":"2021-10-15T20:15:12","slug":"if-rbc-ceo-is-right-about-impending-spending-spree-interest-rates-will-rise-sooner-than-expected","status":"publish","type":"post","link":"https:\/\/www.pantheregroup.com\/2021\/10\/15\/if-rbc-ceo-is-right-about-impending-spending-spree-interest-rates-will-rise-sooner-than-expected\/","title":{"rendered":"If RBC CEO is right about impending spending spree, interest rates will rise sooner than expected"},"content":{"rendered":"<div style=\"text-align:center\"><\/div><p> \n<\/p>\n<div id=\"\">\n<header aria-label=\"Beginning of Article\" class=\"article-header\">\n<nav aria-label=\"Breadcrumb\" class=\"breadcrumbs\">\n<h2 class=\"visually-hidden\">Breadcrumb Trail Links<\/h2>\n<ol class=\"breadcrumbs__items list-unstyled\">\n<li class=\"breadcrumbs__item\"> News <\/li>\n<li class=\"breadcrumbs__item\"> FP Finance <\/li>\n<li class=\"breadcrumbs__item\"> FP Economy <\/li>\n<li class=\"breadcrumbs__item\"> Banking <\/li>\n<\/ol>\n<\/nav>\n<p class=\"article-subtitle\"> Kevin Carmichael: David McKay&#8217;s comments complicate the Bank of Canada&#8217;s ability to control the narrative <\/p>\n<div class=\"article-meta\">\n<div class=\"published-by\">\n<p>Author of the article:<\/p>\n<p> <span class=\"published-by__author\">Kevin Carmichael<\/span> <\/div><\/div>\n<figure class=\"featured-image\"><picture class=\"featured-image__ratio featured-image-category__banking\"><\/picture><figcaption class=\"featured-image__caption image-caption\"><span class=\"caption\">Royal Bank of Canada chief executive David McKay speaks in Toronto on April 6, 2017. <\/span> <span class=\"credit\">Photo by Frank Gunn\/THE CANADIAN PRESS<\/span> <\/figcaption><\/figure>\n<\/header>\n<section class=\"article-content__content-group\">\n<h2 class=\"visually-hidden\">Article content<\/h2>\n<p>How are you going to spend your pandemic savings? Think carefully. The answer should inform the path for interest rates, but the two most important figures in Canadian finance disagree on how you\u2019ll respond.<\/p>\n<\/section>\n<div class=\"ad__section-border article-content__ad-group\">\n<section class=\"ad\">\n<h2 class=\"visually-hidden\">Advertisement<\/h2>\n<div class=\"ad__container\">\n<div class=\"ad__inner\" id=\"ad__inner-2\">\n<div class=\"ad__inner__container\" data-ad=\"[[6,6],[1200,250],[1200,90],[970,90],[970,250],[728,90],[300,250]]\" data-ad-interscroller=\"6x6\" data-ad-loc=\"2\" data-ad-mobile=\"[[6,6],[320,50],[300,50],[300,250],[300,600]]\" id=\"ad-2\" style=\"--desktopHeight:250px;--mobileHeight:600px\">\n<div class=\"ad__placeholder\">\n<p> This advertisement has not loaded yet, but your article continues below. <\/p>\n<\/p><\/div><\/div><\/div><\/div>\n<\/section>\n<\/div>\n<section class=\"article-content__content-group\">\n<h2 class=\"visually-hidden\">Article content<\/h2>\n<p>David McKay, chief executive of Royal Bank of Canada, the country\u2019s biggest lender and second-biggest company by market capitalization after Shopify Inc., thinks we\u2019re on the verge of an epic shopping spree.<\/p>\n<p>Tiff Macklem, the Bank of Canada governor, concedes that possibility, but thinks it\u2019s more likely a shell-shocked nation will use most of its excess cash to save, invest and pay off debt. His outlook is one of the reasons the central bank doubled down on its pledge to leave the benchmark lending rate at 0.25 per cent until at least the second half of 2022, even as inflation escaped the Bank of Canada\u2019s comfort zone this summer.<\/p>\n<p data-async=\"\">Macklem and his peers at other central banks see inflation as mostly a one-off due to pandemic-related supply disruptions. Elevated unemployment rates, among other indicators, suggest the economy has plenty of room to expand before it begins testing its ability to generate non-inflationary growth. \u201cThere is still considerable excess supply in the economy,\u201d he said on a conference call with reporters on Oct. 7. \u201cThere is capacity to meet that demand.\u201d<\/p>\n<\/section>\n<div class=\"ad__section-border article-content__ad-group\">\n<section class=\"ad\">\n<h2 class=\"visually-hidden\">Advertisement<\/h2>\n<div class=\"ad__container\">\n<div class=\"ad__inner\" id=\"ad__inner-3\">\n<div class=\"ad__inner__container\" data-ad=\"[[7,7],[1200,250],[1200,90],[970,90],[970,250],[728,90],[300,250]]\" data-ad-interscroller=\"7x7\" data-ad-loc=\"3\" data-ad-mobile=\"[[7,7],[300,250],[320,50],[300,50]]\" id=\"ad-3\" style=\"--desktopHeight:250px;--mobileHeight:250px\">\n<div class=\"ad__placeholder\">\n<p> This advertisement has not loaded yet, but your article continues below. <\/p>\n<\/p><\/div><\/div><\/div><\/div>\n<\/section>\n<\/div>\n<section class=\"article-content__content-group\">\n<h2 class=\"visually-hidden\">Article content<\/h2>\n<p data-async=\"\">That capacity is closing. Statistics Canada\u2019s capacity utilization rate, which measures the extent to which industry is maximizing its production capability, was 82 per cent in the second quarter , lower than 84.3 per cent two year earlier, but about the same as it was at the start of 2020. The unemployment rate was 6.9 per cent in September, compared with pre-pandemic levels of around 5.5 per cent.<\/p>\n<p>But the crux of the debate is about whether a crisis unlike any of us has ever experienced has altered our propensity to spend. Households were sitting on savings of $208 billion in the second quarter, compared with $17.9 billion in the second quarter of 2019, according to Statistics Canada data.<\/p>\n<p data-async=\"\">Bankers in Canada and the United States doubt North Americans have lost their taste for conspicuous consumption. Much of the household savings glut represents money that is \u201cjust sitting there waiting to be spent,\u201d McKay told a virtual audience assembled by the Institute of International Finance on Oct. 13.<\/p>\n<\/section>\n<div class=\"ad__section-border article-content__ad-group\">\n<section class=\"ad\">\n<h2 class=\"visually-hidden\">Advertisement<\/h2>\n<div class=\"ad__container\">\n<div class=\"ad__inner\" id=\"ad__inner-4\">\n<div class=\"ad__inner__container\" data-ad=\"[[1200,250],[1200,90],[970,90],[970,250],[728,90],[300,250]]\" data-ad-loc=\"4\" data-ad-mobile=\"[[320,50],[300,50],[300,250]]\" id=\"ad-4\" style=\"--desktopHeight:250px;--mobileHeight:250px\">\n<div class=\"ad__placeholder\">\n<p> This advertisement has not loaded yet, but your article continues below. <\/p>\n<\/p><\/div><\/div><\/div><\/div>\n<\/section>\n<\/div>\n<section class=\"article-content__content-group\">\n<h2 class=\"visually-hidden\">Article content<\/h2>\n<p>\u201cThe debate between central bankers and CEOs is how fast does it get spent and where does it get spent,\u201d he continued. \u201cMost central bankers think it is going to be a decade and that it\u2019s largely going to go to pay down debt first. Corporate CEOs think it\u2019s going to get consumed and, therefore, create demand. The balance between those two worlds, I think, is one of the biggest drivers of where you come out on the inflation argument and the (economic) growth rate.\u201d<\/p>\n<p>McKay\u2019s comments complicate the Bank of Canada\u2019s ability to control the narrative, key to managing expectations about where prices are headed. Coffee-counter chatter about the price of lumber can be explained away, and ideologically tinged rants about how monetary policy is debasing the currency can be ignored. Expressions of doubt from the head of the country\u2019s biggest financial institution represent a different level of criticism. The central bank will need a convincing story when it next updates its economic outlook on Oct. 27; that, or concede that McKay is right and change course entirely.<\/p>\n<\/section>\n<div class=\"ad__section-border article-content__ad-group\">\n<section class=\"ad\">\n<h2 class=\"visually-hidden\">Advertisement<\/h2>\n<div class=\"ad__container\">\n<div class=\"ad__inner\" id=\"ad__inner-5\">\n<div class=\"ad__inner__container\" data-ad=\"[[1200,250],[1200,90],[970,90],[970,250],[728,90],[300,250]]\" data-ad-loc=\"5\" data-ad-mobile=\"[[320,50],[300,50],[300,250]]\" id=\"ad-5\" style=\"--desktopHeight:250px;--mobileHeight:250px\">\n<div class=\"ad__placeholder\">\n<p> This advertisement has not loaded yet, but your article continues below. <\/p>\n<\/p><\/div><\/div><\/div><\/div>\n<\/section>\n<\/div>\n<section class=\"article-content__content-group\">\n<h2 class=\"visually-hidden\">Article content<\/h2>\n<p>For now, Macklem is sticking to his position that inflation is transitory. Asked about McKay\u2019s comments, the governor reiterated that price pressures will recede as soon as suppliers and logistics companies work through an unusual array of disruptions ranging from port congestion to drought. \u201cThere is a fair amount of ingenuity in the business community,\u201d he told reporters on Oct. 14. \u201cThey have in the past found ways to work through these.\u201d<\/p>\n<p>The Bank of Canada isn\u2019t overly worried that its policies will unleash more demand than the economy can handle. Its quarterly surveys of consumer sentiment suggest that households are less keen to splurge on stuff they don\u2019t really need.<\/p>\n<section aria-labelledby=\"moreTopicLabel4747805901264819294232117249078917\" class=\"more-topic\" data-carousel-component=\"\" data-carousel-icon-button=\"\" data-carousel-type=\"list\"> <button aria-hidden=\"true\" class=\"more-topic__button-prev\" data-carousel-prev=\"\" tabindex=\"-1\" title=\"previous\" type=\"button\"\/> <\/p>\n<ol class=\"more-topic__items list-unstyled\" data-carousel-slide-list=\"\" tabindex=\"0\">\n<li class=\"more-topic__item\" data-carousel-item=\"\">  <picture class=\"more-topic__item-image\"><img decoding=\"async\" src=\"data:image\/gif;base64,R0lGODlhAQABAIAAAAAAAP\/\/\/ywAAAAAAQABAAACAUwAOw==\" fifu-lazy=\"1\" fifu-data-sizes=\"auto\" fifu-data-srcset=\"https:\/\/i1.wp.com\/smartcdn.prod.postmedia.digital\/financialpost\/wp-content\/uploads\/2021\/10\/no1013rbc_ceo.jpg?h=96&strip=all&quality=80&ssl=1&w=75&resize=75&ssl=1 75w, https:\/\/i1.wp.com\/smartcdn.prod.postmedia.digital\/financialpost\/wp-content\/uploads\/2021\/10\/no1013rbc_ceo.jpg?h=96&strip=all&quality=80&ssl=1&w=100&resize=100&ssl=1 100w, https:\/\/i1.wp.com\/smartcdn.prod.postmedia.digital\/financialpost\/wp-content\/uploads\/2021\/10\/no1013rbc_ceo.jpg?h=96&strip=all&quality=80&ssl=1&w=150&resize=150&ssl=1 150w, https:\/\/i1.wp.com\/smartcdn.prod.postmedia.digital\/financialpost\/wp-content\/uploads\/2021\/10\/no1013rbc_ceo.jpg?h=96&strip=all&quality=80&ssl=1&w=240&resize=240&ssl=1 240w, https:\/\/i1.wp.com\/smartcdn.prod.postmedia.digital\/financialpost\/wp-content\/uploads\/2021\/10\/no1013rbc_ceo.jpg?h=96&strip=all&quality=80&ssl=1&w=320&resize=320&ssl=1 320w, https:\/\/i1.wp.com\/smartcdn.prod.postmedia.digital\/financialpost\/wp-content\/uploads\/2021\/10\/no1013rbc_ceo.jpg?h=96&strip=all&quality=80&ssl=1&w=500&resize=500&ssl=1 500w, https:\/\/i1.wp.com\/smartcdn.prod.postmedia.digital\/financialpost\/wp-content\/uploads\/2021\/10\/no1013rbc_ceo.jpg?h=96&strip=all&quality=80&ssl=1&w=640&resize=640&ssl=1 640w, https:\/\/i1.wp.com\/smartcdn.prod.postmedia.digital\/financialpost\/wp-content\/uploads\/2021\/10\/no1013rbc_ceo.jpg?h=96&strip=all&quality=80&ssl=1&w=800&resize=800&ssl=1 800w, https:\/\/i1.wp.com\/smartcdn.prod.postmedia.digital\/financialpost\/wp-content\/uploads\/2021\/10\/no1013rbc_ceo.jpg?h=96&strip=all&quality=80&ssl=1&w=1024&resize=1024&ssl=1 1024w, https:\/\/i1.wp.com\/smartcdn.prod.postmedia.digital\/financialpost\/wp-content\/uploads\/2021\/10\/no1013rbc_ceo.jpg?h=96&strip=all&quality=80&ssl=1&w=1280&resize=1280&ssl=1 1280w, https:\/\/i1.wp.com\/smartcdn.prod.postmedia.digital\/financialpost\/wp-content\/uploads\/2021\/10\/no1013rbc_ceo.jpg?h=96&strip=all&quality=80&ssl=1&w=1600&resize=1600&ssl=1 1600w\" alt=\"Dave McKay, president and chief executive officer of Royal Bank of Canada, speaks during the company's annual general meeting in Toronto on April 6, 2017.\" class=\"lazyload\" fifu-data-src=\"https:\/\/i1.wp.com\/smartcdn.prod.postmedia.digital\/financialpost\/wp-content\/uploads\/2021\/10\/no1013rbc_ceo.jpg?h=96&strip=all&quality=80&ssl=1\" height=\"96\" loading=\"lazy\" srcset=\"https:\/\/smartcdn.prod.postmedia.digital\/financialpost\/wp-content\/uploads\/2021\/10\/no1013rbc_ceo.jpg?h=96&strip=all&quality=80,\n                                    https:\/\/smartcdn.prod.postmedia.digital\/financialpost\/wp-content\/uploads\/2021\/10\/no1013rbc_ceo.jpg?h=192&strip=all&quality=80 2x,\n                                    https:\/\/smartcdn.prod.postmedia.digital\/financialpost\/wp-content\/uploads\/2021\/10\/no1013rbc_ceo.jpg?h=288&strip=all&quality=80 3x\" width=\"96\"\/><\/picture>\n<h3 class=\"more-topic__item-text\"> <span class=\"more-topic__item-text-clamp\"> Blockchain, AI, internet of things will change banking, RBC CEO says <\/span> <\/h3>\n<\/li>\n<li class=\"more-topic__item\" data-carousel-item=\"\">  <picture class=\"more-topic__item-image\"><img decoding=\"async\" src=\"data:image\/gif;base64,R0lGODlhAQABAIAAAAAAAP\/\/\/ywAAAAAAQABAAACAUwAOw==\" fifu-lazy=\"1\" fifu-data-sizes=\"auto\" fifu-data-srcset=\"https:\/\/i3.wp.com\/smartcdn.prod.postmedia.digital\/financialpost\/wp-content\/uploads\/2021\/09\/no0929norgesbank.jpg?h=96&strip=all&quality=80&ssl=1&w=75&resize=75&ssl=1 75w, https:\/\/i3.wp.com\/smartcdn.prod.postmedia.digital\/financialpost\/wp-content\/uploads\/2021\/09\/no0929norgesbank.jpg?h=96&strip=all&quality=80&ssl=1&w=100&resize=100&ssl=1 100w, https:\/\/i3.wp.com\/smartcdn.prod.postmedia.digital\/financialpost\/wp-content\/uploads\/2021\/09\/no0929norgesbank.jpg?h=96&strip=all&quality=80&ssl=1&w=150&resize=150&ssl=1 150w, https:\/\/i3.wp.com\/smartcdn.prod.postmedia.digital\/financialpost\/wp-content\/uploads\/2021\/09\/no0929norgesbank.jpg?h=96&strip=all&quality=80&ssl=1&w=240&resize=240&ssl=1 240w, https:\/\/i3.wp.com\/smartcdn.prod.postmedia.digital\/financialpost\/wp-content\/uploads\/2021\/09\/no0929norgesbank.jpg?h=96&strip=all&quality=80&ssl=1&w=320&resize=320&ssl=1 320w, https:\/\/i3.wp.com\/smartcdn.prod.postmedia.digital\/financialpost\/wp-content\/uploads\/2021\/09\/no0929norgesbank.jpg?h=96&strip=all&quality=80&ssl=1&w=500&resize=500&ssl=1 500w, https:\/\/i3.wp.com\/smartcdn.prod.postmedia.digital\/financialpost\/wp-content\/uploads\/2021\/09\/no0929norgesbank.jpg?h=96&strip=all&quality=80&ssl=1&w=640&resize=640&ssl=1 640w, https:\/\/i3.wp.com\/smartcdn.prod.postmedia.digital\/financialpost\/wp-content\/uploads\/2021\/09\/no0929norgesbank.jpg?h=96&strip=all&quality=80&ssl=1&w=800&resize=800&ssl=1 800w, https:\/\/i3.wp.com\/smartcdn.prod.postmedia.digital\/financialpost\/wp-content\/uploads\/2021\/09\/no0929norgesbank.jpg?h=96&strip=all&quality=80&ssl=1&w=1024&resize=1024&ssl=1 1024w, https:\/\/i3.wp.com\/smartcdn.prod.postmedia.digital\/financialpost\/wp-content\/uploads\/2021\/09\/no0929norgesbank.jpg?h=96&strip=all&quality=80&ssl=1&w=1280&resize=1280&ssl=1 1280w, https:\/\/i3.wp.com\/smartcdn.prod.postmedia.digital\/financialpost\/wp-content\/uploads\/2021\/09\/no0929norgesbank.jpg?h=96&strip=all&quality=80&ssl=1&w=1600&resize=1600&ssl=1 1600w\" alt=\"To different degrees, Norway's economic trends are matched across advanced economies.\" class=\"lazyload\" fifu-data-src=\"https:\/\/i3.wp.com\/smartcdn.prod.postmedia.digital\/financialpost\/wp-content\/uploads\/2021\/09\/no0929norgesbank.jpg?h=96&strip=all&quality=80&ssl=1\" height=\"96\" loading=\"lazy\" srcset=\"https:\/\/smartcdn.prod.postmedia.digital\/financialpost\/wp-content\/uploads\/2021\/09\/no0929norgesbank.jpg?h=96&strip=all&quality=80,\n                                    https:\/\/smartcdn.prod.postmedia.digital\/financialpost\/wp-content\/uploads\/2021\/09\/no0929norgesbank.jpg?h=192&strip=all&quality=80 2x,\n                                    https:\/\/smartcdn.prod.postmedia.digital\/financialpost\/wp-content\/uploads\/2021\/09\/no0929norgesbank.jpg?h=288&strip=all&quality=80 3x\" width=\"96\"\/><\/picture>\n<h3 class=\"more-topic__item-text\"> <span class=\"more-topic__item-text-clamp\"> An end to super-cheap money? Central banks begin tightening cycle <\/span> <\/h3>\n<\/li>\n<li class=\"more-topic__item\" data-carousel-item=\"\">  <picture class=\"more-topic__item-image\"><img decoding=\"async\" src=\"data:image\/gif;base64,R0lGODlhAQABAIAAAAAAAP\/\/\/ywAAAAAAQABAAACAUwAOw==\" fifu-lazy=\"1\" fifu-data-sizes=\"auto\" fifu-data-srcset=\"https:\/\/i3.wp.com\/smartcdn.prod.postmedia.digital\/financialpost\/wp-content\/uploads\/2021\/09\/no0928boc.jpg?h=96&strip=all&quality=80&ssl=1&w=75&resize=75&ssl=1 75w, https:\/\/i3.wp.com\/smartcdn.prod.postmedia.digital\/financialpost\/wp-content\/uploads\/2021\/09\/no0928boc.jpg?h=96&strip=all&quality=80&ssl=1&w=100&resize=100&ssl=1 100w, https:\/\/i3.wp.com\/smartcdn.prod.postmedia.digital\/financialpost\/wp-content\/uploads\/2021\/09\/no0928boc.jpg?h=96&strip=all&quality=80&ssl=1&w=150&resize=150&ssl=1 150w, https:\/\/i3.wp.com\/smartcdn.prod.postmedia.digital\/financialpost\/wp-content\/uploads\/2021\/09\/no0928boc.jpg?h=96&strip=all&quality=80&ssl=1&w=240&resize=240&ssl=1 240w, https:\/\/i3.wp.com\/smartcdn.prod.postmedia.digital\/financialpost\/wp-content\/uploads\/2021\/09\/no0928boc.jpg?h=96&strip=all&quality=80&ssl=1&w=320&resize=320&ssl=1 320w, https:\/\/i3.wp.com\/smartcdn.prod.postmedia.digital\/financialpost\/wp-content\/uploads\/2021\/09\/no0928boc.jpg?h=96&strip=all&quality=80&ssl=1&w=500&resize=500&ssl=1 500w, https:\/\/i3.wp.com\/smartcdn.prod.postmedia.digital\/financialpost\/wp-content\/uploads\/2021\/09\/no0928boc.jpg?h=96&strip=all&quality=80&ssl=1&w=640&resize=640&ssl=1 640w, https:\/\/i3.wp.com\/smartcdn.prod.postmedia.digital\/financialpost\/wp-content\/uploads\/2021\/09\/no0928boc.jpg?h=96&strip=all&quality=80&ssl=1&w=800&resize=800&ssl=1 800w, https:\/\/i3.wp.com\/smartcdn.prod.postmedia.digital\/financialpost\/wp-content\/uploads\/2021\/09\/no0928boc.jpg?h=96&strip=all&quality=80&ssl=1&w=1024&resize=1024&ssl=1 1024w, https:\/\/i3.wp.com\/smartcdn.prod.postmedia.digital\/financialpost\/wp-content\/uploads\/2021\/09\/no0928boc.jpg?h=96&strip=all&quality=80&ssl=1&w=1280&resize=1280&ssl=1 1280w, https:\/\/i3.wp.com\/smartcdn.prod.postmedia.digital\/financialpost\/wp-content\/uploads\/2021\/09\/no0928boc.jpg?h=96&strip=all&quality=80&ssl=1&w=1600&resize=1600&ssl=1 1600w\" alt=\"Markets have priced in two rates hikes from the Bank of Canada within a year, according to swaps trading.\" class=\"lazyload\" fifu-data-src=\"https:\/\/i3.wp.com\/smartcdn.prod.postmedia.digital\/financialpost\/wp-content\/uploads\/2021\/09\/no0928boc.jpg?h=96&strip=all&quality=80&ssl=1\" height=\"96\" loading=\"lazy\" srcset=\"https:\/\/smartcdn.prod.postmedia.digital\/financialpost\/wp-content\/uploads\/2021\/09\/no0928boc.jpg?h=96&strip=all&quality=80,\n                                    https:\/\/smartcdn.prod.postmedia.digital\/financialpost\/wp-content\/uploads\/2021\/09\/no0928boc.jpg?h=192&strip=all&quality=80 2x,\n                                    https:\/\/smartcdn.prod.postmedia.digital\/financialpost\/wp-content\/uploads\/2021\/09\/no0928boc.jpg?h=288&strip=all&quality=80 3x\" width=\"96\"\/><\/picture>\n<h3 class=\"more-topic__item-text\"> <span class=\"more-topic__item-text-clamp\"> BoC likely to let inflation run hot, keep interest rates low, Teachers\u2019 chief economist says <\/span> <\/h3>\n<\/li>\n<\/ol>\n<p><button aria-hidden=\"true\" class=\"more-topic__button-next\" data-carousel-next=\"\" tabindex=\"-1\" title=\"next\" type=\"button\"\/> <\/section>\n<\/section>\n<div class=\"ad__section-border article-content__ad-group\">\n<section class=\"ad\">\n<h2 class=\"visually-hidden\">Advertisement<\/h2>\n<div class=\"ad__container\">\n<div class=\"ad__inner\" id=\"ad__inner-6\">\n<div class=\"ad__inner__container\" data-ad=\"[[1200,250],[1200,90],[970,90],[970,250],[728,90],[300,250]]\" data-ad-loc=\"6\" data-ad-mobile=\"[[320,50],[300,50],[300,250]]\" id=\"ad-6\" style=\"--desktopHeight:250px;--mobileHeight:250px\">\n<div class=\"ad__placeholder\">\n<p> This advertisement has not loaded yet, but your article continues below. <\/p>\n<\/p><\/div><\/div><\/div><\/div>\n<\/section>\n<\/div>\n<section class=\"article-content__content-group\">\n<h2 class=\"visually-hidden\">Article content<\/h2>\n<p>The central bank\u2019s first post-pandemic outlook predicted that very little of Canadians\u2019 excess savings would find its way into the economy through consumption. Policy-makers later adjusted that view somewhat in July, predicting that 20 per cent of savings would be spent buying goods and services, while the rest would be used to pay off debt, purchase homes and invest. Macklem said another revision is possible once they crunch the numbers for the next outlook.<\/p>\n<p>\u201cWhat (households) have been telling us is they will continue to save a lot of it, but they are going to spend part of it,\u201d he said. \u201cWe will continue to revise those estimates in line with what we hear.\u201d<\/p>\n<p>An upward revision on spending could force the Bank of Canada to raise interest rates sooner than planned. The central bank\u2019s current guidance is that it won\u2019t lift the benchmark rate before the second half of next year, even though inflation has soared to four per cent, twice Macklem\u2019s target.<\/p>\n<p>That\u2019s a reasonable stance if inflationary pressures are coming from weird supply issues. Higher interest rates won\u2019t help ports unload ships any faster, nor will they bring rain to parched fields or speed the production of computer chips. But they would curb demand.<\/p>\n<p>If evidence starts to show that we\u2019re as materialistic as we were before the pandemic, it might be a good idea to factor higher interest rates into your spending plans.<\/p>\n<p data-async=\"\"><em>\u2022 Email: kcarmichael@postmedia.com | Twitter: <a class=\"\u201ctwitter-follow-button\u201d\" data-evt=\"click\" data-evt-typ=\"User Interaction Click\" data-evt-val=\"{\" control_fields=\"\" source=\"\" type=\"\" name=\"\" target=\"\" url=\"\" vertical=\"\" position=\"\" pixels=\"\" link=\"\" href=\"https:\/\/twitter.com\/carmichaelkevin\" rel=\"noopener noreferrer nofollow\">carmichaelkevin<\/a><\/em><\/p>\n<\/section>\n<section class=\"article-content__share-group article-delimiter\" data-evt=\"beforeunload\" data-evt-typ=\"scroll-depth\" data-evt-val=\"{\" control_fields=\"\" of=\"\" page=\"\" viewed=\"\" story=\"\">\n<h2 class=\"visually-hidden\">Share this article in your social network<\/h2>\n<\/section>\n<div class=\"article-content__ad-group\">\n<div class=\"ad__section-border ad__section-border--category visually-hidden\">\n<section class=\"ad\">\n<h2 class=\"visually-hidden\">Advertisement<\/h2>\n<div class=\"ad__container\">\n<div class=\"ad__inner\" id=\"ad__inner-acceptable\">\n<div class=\"ad__inner__container\" data-ad=\"[[1200,250],[1200,90],[970,90],[970,250],[728,90],[300,250]]\" data-ad-acceptable=\"\" data-ad-loc=\"1\" data-ad-mobile=\"[[320,50],[300,50],[300,250]]\" id=\"ad-acceptable\" style=\"--desktopHeight:250px;--mobileHeight:250px\">\n<div class=\"ad__placeholder\">\n<p> This advertisement has not loaded yet, but your article continues below. <\/p>\n<\/p><\/div><\/div><\/div><\/div>\n<\/section>\n<\/div><\/div>\n<div class=\"widget article-content__widget-group article-content__widget-group--slot1\">\n<section aria-labelledby=\"FinancialPostTopStories3420952200678570737356681437698313\" class=\"newsletter-widget fp-headlinenews\" data-account-id=\"b9d3df2fccd108b5eff3c44f573b2cd6\" data-newsletter=\"single\" data-newsletter-component=\"\" data-target-list=\"FP_HeadlineNews\" data-widget=\"newsletter\"><img decoding=\"async\" src=\"data:image\/gif;base64,R0lGODlhAQABAIAAAAAAAP\/\/\/ywAAAAAAQABAAACAUwAOw==\" fifu-lazy=\"1\" fifu-data-sizes=\"auto\" fifu-data-srcset=\"https:\/\/storage.googleapis.com\/pmd-stage-northamerica-northeast1-dcs-static-files\/8.1.3\/websites\/images\/newsletters\/logo\/newsletter-envelope.svg 75w, https:\/\/storage.googleapis.com\/pmd-stage-northamerica-northeast1-dcs-static-files\/8.1.3\/websites\/images\/newsletters\/logo\/newsletter-envelope.svg 100w, https:\/\/storage.googleapis.com\/pmd-stage-northamerica-northeast1-dcs-static-files\/8.1.3\/websites\/images\/newsletters\/logo\/newsletter-envelope.svg 150w, https:\/\/storage.googleapis.com\/pmd-stage-northamerica-northeast1-dcs-static-files\/8.1.3\/websites\/images\/newsletters\/logo\/newsletter-envelope.svg 240w, https:\/\/storage.googleapis.com\/pmd-stage-northamerica-northeast1-dcs-static-files\/8.1.3\/websites\/images\/newsletters\/logo\/newsletter-envelope.svg 320w, https:\/\/storage.googleapis.com\/pmd-stage-northamerica-northeast1-dcs-static-files\/8.1.3\/websites\/images\/newsletters\/logo\/newsletter-envelope.svg 500w, https:\/\/storage.googleapis.com\/pmd-stage-northamerica-northeast1-dcs-static-files\/8.1.3\/websites\/images\/newsletters\/logo\/newsletter-envelope.svg 640w, https:\/\/storage.googleapis.com\/pmd-stage-northamerica-northeast1-dcs-static-files\/8.1.3\/websites\/images\/newsletters\/logo\/newsletter-envelope.svg 800w, https:\/\/storage.googleapis.com\/pmd-stage-northamerica-northeast1-dcs-static-files\/8.1.3\/websites\/images\/newsletters\/logo\/newsletter-envelope.svg 1024w, https:\/\/storage.googleapis.com\/pmd-stage-northamerica-northeast1-dcs-static-files\/8.1.3\/websites\/images\/newsletters\/logo\/newsletter-envelope.svg 1280w, https:\/\/storage.googleapis.com\/pmd-stage-northamerica-northeast1-dcs-static-files\/8.1.3\/websites\/images\/newsletters\/logo\/newsletter-envelope.svg 1600w\" alt=\"Top Stories Newsletter logo\" class=\"newsletter-widget__logo newsletter-widget__logo--FP_HeadlineNews\" height=\"80\" loading=\"lazy\" fifu-data-src=\"https:\/\/storage.googleapis.com\/pmd-stage-northamerica-northeast1-dcs-static-files\/8.1.3\/websites\/images\/newsletters\/logo\/newsletter-envelope.svg\" width=\"97\"\/><\/p>\n<div class=\"newsletter-widget__body\">\n<h2 class=\"newsletter-widget__title\" id=\"FinancialPostTopStories3420952200678570737356681437698313\">Financial Post Top Stories<\/h2>\n<p class=\"newsletter-widget__text\">Sign up to receive the daily top stories from the Financial Post, a division of Postmedia Network Inc.<\/p>\n<div class=\"js-replace-main\">  <small class=\"newsletter-widget__disclaimer text-size--micro\"> By clicking on the sign up button you consent to receive the above newsletter from Postmedia Network Inc. You may unsubscribe any time by clicking on the unsubscribe link at the bottom of our emails. Postmedia Network Inc. | 365 Bloor Street East, Toronto, Ontario, M4W 3L4 | 416-383-2300 <\/small> <\/div>\n<div class=\"js-submit-success\" hidden=\"\" id=\"submitSuccessFP_HeadlineNews\">\n<h3 class=\"newsletter__feedback--heading\">Thanks for signing up!<\/h3>\n<p class=\"newsletter-widget__text\">A welcome email is on its way. If you don&#8217;t see it, please check your junk folder.<\/p>\n<p class=\"newsletter-widget__text newsletter__feedback--last\">The next issue of Financial Post Top Stories will soon be in your inbox.<\/p>\n<\/p><\/div>\n<p class=\"newsletter-widget__text js-submit-error\" hidden=\"\" id=\"submitErrorFP_HeadlineNews\"> We encountered an issue signing you up. Please try again <\/p>\n<\/p><\/div>\n<\/section>\n<\/div>\n<footer aria-label=\"Article Comments\" class=\"article-footer\">\n<section class=\"comments__section\" id=\"comments\">\n<h3 class=\"widget-title comments-anchor\" id=\"comments-area\">Comments<\/h3>\n<p class=\"comments__section-disclaimer\"> Postmedia is committed to maintaining a lively but civil forum for discussion and encourage all readers to share their views on our articles. Comments may take up to an hour for moderation before appearing on the site. We ask you to keep your comments relevant and respectful. We have enabled email notifications\u2014you will now receive an email if you receive a reply to your comment, there is an update to a comment thread you follow or if a user you follow comments. Visit our Community Guidelines for more information and details on how to adjust your email settings. <\/p>\n<\/section>\n<\/footer>\n<\/div>\n<p><script async src=\"\/\/platform.twitter.com\/widgets.js\" charset=\"utf-8\"><\/script><br \/>\n<br \/>\n<br \/>If RBC CEO is right about impending spending spree, interest rates will rise sooner than expected<\/a><br \/>\n<br \/>2021-10-15 20:15:12<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Breadcrumb Trail Links News FP Finance FP Economy Banking Kevin Carmichael: David McKay&#8217;s comments complicate the Bank of Canada&#8217;s ability to control the narrative Author of the article: Kevin Carmichael&#8230;<\/p>\n","protected":false},"author":2,"featured_media":15075,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"fifu_image_url":"https:\/\/smartcdn.prod.postmedia.digital\/financialpost\/wp-content\/uploads\/2021\/10\/no1015rbc_cro.jpg?quality=90&strip=all&w=288","fifu_image_alt":"","footnotes":""},"categories":[31],"tags":[],"class_list":["post-15074","post","type-post","status-publish","format-standard","has-post-thumbnail","category-economy"],"_links":{"self":[{"href":"https:\/\/www.pantheregroup.com\/api\/wp\/v2\/posts\/15074","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.pantheregroup.com\/api\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.pantheregroup.com\/api\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.pantheregroup.com\/api\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.pantheregroup.com\/api\/wp\/v2\/comments?post=15074"}],"version-history":[{"count":0,"href":"https:\/\/www.pantheregroup.com\/api\/wp\/v2\/posts\/15074\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.pantheregroup.com\/api\/wp\/v2\/media\/15075"}],"wp:attachment":[{"href":"https:\/\/www.pantheregroup.com\/api\/wp\/v2\/media?parent=15074"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.pantheregroup.com\/api\/wp\/v2\/categories?post=15074"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.pantheregroup.com\/api\/wp\/v2\/tags?post=15074"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}