Ali Hanif July 25, 2018 No Comments

In this week’s blog, Tembo Financial will outline how interest rates are set in Canada and the United States. 

Rate setting by the Bank of Canada (BOC) and the Federal Reserve (Fed), most impact Canadian and GTA real estate. 

In Canada, the Bank of Canada’s interest rate is set by the Governing Council, a team of three Deputy Governors, the Deputy Governor, and Governor Stephen Poloz. 
Similarly, in the United States, the interest rate is set by the Federal Reserve’s Open Market Committee (FOMC). The FOMC is a Committee made up of senior officers of the Fed including the Fed Chair and Governors. The rate is deliberated upon by the FOMC, generally the Committee must come to a consensus agreement on the rate and the general direction of monetary policy. Each member of the Committee has the authority and opportunity to express his or her views on the state of the economy and their opinion on where the rate should go.
The FOMC is independent. It does not answer to the President, the Congress, or any public organ of U.S. power. The Federal Reserve is not audited by Congress, and is fiercely protective of its independence, privileges, and powers. It is arguably the most powerful socio-economic institution on the planet. 

Further Rate Hikes Are Coming

Tembo Financial reminds its viewers that interest rate trajectories will remain upward as long as the economy remains stable. Expect and prepare for rate hikes.

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