Over the weekend, Ontario Premier Doug Ford issued a letter calling on the Bank of Canada and Prime Minister Justin Trudeau to halt any upcoming interest rate hikes. Ford stated that there was no excuse for increasing the pressure that previous interest rate hikes have already placed on families and businesses.
In Canada, there was previously an unspoken rule that politicians were not to criticize the central bank. However, politicians like Conservative Leader Pierre Poilievre and B.C. NDP Premier David Eby, as well as Ford in the past, have criticized the central bank for interfering in a supposedly non-partisan process. Critics argue that politicians have no choice but to address this issue when it is constantly being raised by their constituents and when they receive numerous stories about people’s difficult financial situations.
Ford’s letter also highlighted the supply chain issues involved, emphasizing that hardworking individuals end up paying the price when everyday essentials such as groceries and fuel cannot reach the market in a timely manner. The affordability crisis is being worsened by several factors, with interest rate hikes playing a significant role. The Bank of Canada has increased its key lending rate 10 times since March in an effort to control inflation and bring it close to 2 percent. However, the rapid pace of rate hikes is making daily life more challenging for many people and businesses.
The restaurant industry is particularly hard hit, with Restaurants Canada reporting that half of its members are operating at a loss or just breaking even as food costs continue to rise. Mortgage renewals are also causing stress for consumers, as many Canadians are forced to make significantly higher monthly payments as rates go up. A recent Angus Reid Institute survey revealed that Canadians are feeling more down than usual about their financial situation and prospects.
Furthermore, financial regulators and banks are concerned about the health of the financial system due to the rising risks in mortgage loans. The top six banks in Canada have collectively set aside about $3.5 billion towards bad debt provisions in their latest quarterly earnings.
The hardships faced by low-income individuals struggling to afford groceries and middle-class homeowners at risk of defaulting on their mortgages are real and likely to worsen. With these challenges in mind, it is understandable why people are speaking out and criticizing the Bank of Canada.
It is important to note that the views expressed in this article are the opinions of the author and do not necessarily reflect the views of The Epoch Times.