Provincial government asks Central Bank of Canada not to raise key rate
Ontario Premier Doug Ford made that request to the Bannk of Canada.
The Bank of Canada has been steadily raising its key interest rate lately. Over the summer, the Central Bank did it twice, and the next decision on the key rate will be made on September 6. And while most economists believe the rate will remain at the current level of 5%, another increase cannot be ruled out.
Not everyone agrees with the Bank of Canada's policy. Provincial officials are calling for a halt to key rate hikes. On Sunday, Ontario Premier Doug Ford asked Central Bank Governor Tiff Macklem directly to stop raising interest rates because current rates are already having a devastating impact on families and businesses in the province.
Ford was not the first to address the Central Bank with such a request. Last week, British Columbia Premier David Eby sent a similar letter to Macklem.
The last time the Central Bank of Canada raised its key rate was in July. This is necessary in order to achieve the inflation target of 2%, as the Bank said.
In his letter, Ford urged Macklem to "consider the effect higher interest rates are having on everyday people" before the Central Bank announces its next interest rate decision on Wednesday. The letter also said Canadian banks expect a spike in loan and mortgage defaults directly related to the rate hike.
The prime minister reminded in his address that the Bank of Canada has already raised its key rate 10 times in the past year and a half, costing families "thousands of dollars a month" to cover mortgage payments.
Ford's letter says Canadian banks expect a spike in loan and mortgage defaults directly related to higher rates.
The letter also says that instead of raising rates, the federal government should work with its provincial and territorial counterparts to invest in and build critical infrastructure projects.
