Ontario Premier Doug Ford has made a passionate plea to the Bank of Canada, urging them to refrain from another interest rate increase scheduled for this week. In an open letter addressed to Bank of Canada governor Tiff Macklem on Sunday, Ford emphasized the potential negative repercussions such a move could have on families and businesses already grappling with financial hardships.
Ford expressed his concern, stating, “Millions of Canadians, including here in Ontario, are already struggling to make ends meet. There is simply no excuse for increasing the already crushing pressure previous interest rate hikes have placed on so many families and businesses.”
These interest rate hikes are directly impacting the lives of Ontarians, particularly those who are required to renew their mortgages at higher rates, according to Ford. He said, “Every week, I hear directly from families that are paying hundreds or even thousands of dollars more each month on their mortgages. This is an additional expense that ordinary families cannot afford, forcing them to choose between essentials like groceries, fuel, and shelter.”
Ford went on to dismiss Macklem’s arguments that the interest rate hikes were necessary to combat inflation, asserting that the rationale for these increases was becoming increasingly thin.
“While you have said that these crushing increases are necessary to combat inflation, that justification is wearing thin,” Ford wrote.
In addition to his message to the Bank of Canada, Ford also sent a letter to Prime Minister Justin Trudeau, urging him to collaborate with all provincial leaders in addressing the root causes of inflation.
The Bank of Canada is scheduled to announce on Wednesday whether it will raise its key overnight lending rate for the 11th time in the past 18 months in an effort to control inflation. The bank will also release its quarterly Monetary Policy Report, which offers a comprehensive analysis of the Canadian and global economic outlook.
In September, the annual inflation rate dropped to 3.8%, down from the 4% recorded in August. While this figure is notably lower than the peak of 8.1% last June, it still exceeds the Bank of Canada’s target of two percent.
The Bank of Canada initiated an aggressive rate-hike campaign in March 2022 to combat inflation. Prior to the campaign, the bank’s key overnight lending rate was at 0.25%, and it has now reached five percent, the highest level in 22 years. The strategy behind these hikes is to make borrowing money more expensive, encouraging consumers and businesses to spend less, thereby reducing prices and slowing down the economy.
Macklem has reiterated that the bank’s goal is to bring inflation down to two percent, which falls within the official target range of one to three percent.
Ford’s recent plea is the second time that the premier has asked the central bank to stop the rate increases. In September, he urged Bank of Canada “to consider the effect higher interest rates are having on everyday people who are simply trying to make ends meet.”
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