Bank of Canada is going to raise rates
To slow inflation, the Bank of Canada may raise the key rate at which it lends to other banks.
Unifor, Canada's largest union, has stood up for its members, the warehouse workers of the supermarket chain Sobeys. In a Jan. 27, 2022 press release, it announced a four-year agreement that guarantees a 19.5% wage increase: about 5% per year.
Other unions, too, are demanding higher wages. Average earnings in Canada, according to Statistics Canada, rose 2.7% over 2021. Consumer goods went up faster. In addition, not all companies are indexing wages. For example, the journalists' union is demanding that Thomson Reuters, a media company, raise salaries by 8% because they haven't changed since 2020.
Bank of Canada governors are not yet confident that the anticipated wage growth across the country will have a significant impact on inflation so far, in their view, the main factor destabilizing the economy is rising prices. The increase in the key rate affects the economy as a whole: banks are raising rates on all credit products, thereby increasing the attractiveness of deposits. The bank intends to return the increase in prices to the level of 3% by 2023.
