Money Sense ~ December 22nd, 2022
A recap of the ups and downs investors and the markets dealt with in 2022 and a hint of what may be in store for them in 2023.
What happened in 2022 to affect our finances. Let’s break down the highs and lows of 2022.
In late February, when Russia invaded Ukraine, inflation—which had been almost non-existent for decades—was already on the rise, thanks to COVID. Disrupted supply chains and nearly full employment were pushing up food prices and wages. Russia’s invasion of Ukraine led to a spike in oil prices, taking inflation to levels higher than it likely would have hit, if there were no war.
- The central banks take charge
In March, the centrals had to do something to help consumers who were finding it harder and harder to buy groceries. So, they raised interest rates—their most powerful tool to fight inflation. I don’t think anyone, including the Bank of Canada (BoC) and the U.S. Federal Reserve, could have envisioned raising rates, six and seven times respectively, throughout the year, or that they would hike them by as much as they did. Here and in the U.S., interest rates have increased to more than 4%, pushing borrowing costs to new highs.
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