Description: Inflation in Canada is emerging as a bit of a problem with August figures up 4.1% over last year’s numbers. A rise in this first “I” of inflation has prompted speculation that the Bank of Canada will have to respond by raising a second “I” – interest rates. Former Bank of Canada employee David Wolf, now with Fidelity Investments, believes the Bank’s move will be sooner than many others predict.

Date:  September 29, 2021

Source:  financialpost.com

 Link: https://financialpost.com/news/economy/fidelitys-wolf-sees-bank-of-canada-forced-into-early-rate-hike

Discussion points:

1) How would a rise in interest rates impact you as a student?

2) Would your university be impacted by a rise in interest rates? (Hint: Track down your university’s financial statements online, determine if the institution has any outstanding debt, and read about the terms of this debt in the notes to the financial statements.)

3) In Chapter 4 of Wiley’s Financial Accounting: Tools for Business Decision Making we learn about entries for accruals. What accounts are impacted when a company makes an accrual for interest expense on a loan? What are the accurals for the bank loaning the money?