this post was submitted on 29 Feb 2024
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Meanwhile people are facing financial struggles with stupid high food prices and out of budget mortgage renewals.
Let them eat cake....
and lots of people losing their jobs, but hey sure, take your time bank of Canada, no rush
Job losses is the stated goal of the BoC. Job losses dampen consumer spending, which slows down purchases, which (theoretically) stops prices increasing.
It's too bad they can't pick which jobs are lost. Many people on the lower end of the income spectrum (who are more likely to be the ones losing their jobs) can't really cut spending because the vast majority of their income goes to housing, food, and other essentials.
Totally agreed. It's a shit policy that punishes people with precarious jobs.
I have no idea what would be better, TBH. I suspect the working poor would get the short end of the stick, regardless of the solution.
High interest rates tend to prevent further inflation, although it's a fine balance. In other words, high food prices isn't quite the argument for lower rates that you seem to think it is.
Higher interest rates are impacting Canadians in every corner of life. Food costs... mortgages... fuel... they all domino and collapse together. The lack of urgency is directly hurting the vulnerable portion of our society. There's no easy fix. Drop interest rates too fast and you risk pushing inflation back up... don't drop interest rates fast enough and you risk pushing a significant portion of the population into bankruptcy or homelessness (not just home owners... also renters who are forced to absorb that same interest rate hike in the form of higher rents). Within my circle of friends. several have been forced to close businesses because of the impact of the rapid increase in interest rates. It's not the base rate itself, so much as the speed with which it was increased which was faster than their businesses could absorb.
As for mortgage renewals themselves... the insanity of the Canadian system of the typical 5-year renewable mortgages is just plain vanilla stupid. It makes everyone incredibly susceptible to microeconomics instead of averaging out the risk on a macro scale like most other countries do.