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Sign of optimism for business owners following Bank of Canada announcement.

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The Bank of Canada has once again raised its overnight interest rate, this time by 0.5%. And while that can make borrowing somewhat more expensive in the short term, the long term view of Canada’s economy has some small business owners feeling optimistic about the next three years. To help you understand why, here are three reasons to be optimistic as we look forward to the next few years.

Inflation appears to be slowing down.

Yesterday’s increase of 0.5% hasn’t been as large as previous ones this year, suggesting that efforts to curb inflation are working – and there’s evidence to back this up. StatsCan findings indicate that domestic rate of inflation has decreased slightly from 7.0% to 6.9% in September. Just as encouraging for Canadian business owners are signs of economic recovery for our largest trading partner, the United States. Rate of inflation in the United States has come down to 8.2%, their lowest since February and a welcome retreat from June’s 40 year-high of 9%.

Canadian businesses are ready for this.

Despite fears that a recession is coming in late 2022 or early 2023, 82% of small- and medium-sized Canadian businesses, recently by KPMG, are optimistic about a rebound over the next 3 years. More than three quarters of respondents even intend to hire more staff over the next 3 years. But that doesn’t mean their expectations are sky-high, either. Perhaps heeding Bank of Canada Governor Tiff Macklem’s warning that Canadian economic growth needs to slow down so the rate of inflation can ease, 61% of businesses surveyed are preparing for a possible recession by putting holds on technology upgrades and staff expansions. Small businesses that are considering or require upgrades or expansions, should closely examine how they proceed and consult with their advisors and accountants to ensure this is done in a financially viable way.

Businesses with cash have plenty of opportunities.

Increased borrowing costs are linked to greater returns on investments like GICs. For businesses that have extra cash on hand and are looking to invest, this comparatively modest rate hike  makes options like this more enticing. Considered to be relatively low-risk, GICs can be used in a variety of ways to help businesses grow cash savings without taking on the volatility that comes with investing in the stock market. GICs in particular offer businesses the opportunity to reach growth targets while protecting their principal and earning minimum guaranteed returns. These investments offer returns based on the underlying Bank of Canada rate, among other factors, and benefit from rate hikes.

We’re here to help.

Find out more about how your business can make the most of this recent rate hike when you speak with an advisor today. Book an appointment online here or call us at 1.888.517.7000.


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This article is provided for general information purposes only. It is not to be relied upon as financial, tax, or investment advice or guarantees about the future, nor should it be considered a recommendation to buy or sell. Information contained in this article, including information relating to interest rates, market conditions, tax rules, fees, and other investment factors are subject to change without notice and Cost Capital Savings Federal Credit Union is not responsible to update this information. All third party sources are believed to be accurate and reliable as of the date of publication and Coast Capital Savings Federal Credit Union does not guarantee accuracy or reliability of such sources. Readers should consult their own professional advisor for specific financial, investment, and tax advice tailored to their needs to ensure that individual circumstances are considered properly and action is taken based on the latest available information.

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