Canadians are feeling the effects.
A majority of Canadians say they are feeling the effects of the Bank of Canada’s aggressive interest rate hikes, according to a Yahoo/Maru Public Opinion poll released Friday.
The survey of 1,521 Canadians found that 57% of respondents say they are personally feeling the impact of rising interest rates, with 39% saying that ever-higher rates cause some anxiety about the impact on their finance. The poll found that the remaining 18% said they were “worried” about the effects the rate hikes might have on them or their families. Among the “worried sick” group, 22% earn less than $50,000 a year.
At the same time, 43% say that rising interest rates are not a problem for them or their family.
The Bank of Canada quickly raised its benchmark interest rate in the wake of soaring inflation, making five consecutive hikes, four of them outsized. Since March, the central bank’s key rate has risen from 0.25% to 3.25%, the highest level since April 2008, when the Bank of Canada cut rates in the midst of the global financial crisis.
“The biggest dilemma facing the Bank of Canada is not how to crush inflation, but how to do it without crushing many Canadians who were not expecting such an escalation in rates,” said the Maru’s executive vice president, John Wright.
“The ultimate impact can be seen as a consequence to people of being over-leveraged or over-leveraged and over-risked, but it’s fair to say that while many naturally predicted higher rates, few believed that it would be so quick.”
Although inflation peaked at 8.1% in June, it is still well above the 2% target set in the Bank of Canada’s mandate. In a speech earlier this month in Halifax, Bank of Canada Governor Tiff Macklem said spending needed to be slowed in the economy so supply could catch up with demand.
“Put simply, there’s still a lot to do,” Macklem told the Halifax Chamber of Commerce last week.
While a majority say they are feeling the effects of rising interest rates, the poll also found that almost seven in ten Canadians (69%) would rather live with high interest rates than with a high inflation rate.
The survey of 1,521 Canadian adults was conducted between Oct. 7 and Oct. 9 and has an estimated margin of error of +/- 2.5%, 19 times out of 20.
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