British Columbia Premier David Eby is calling on the Bank of Canada to halt further interest rate hikes, saying people are already “hurting” and another increase might worsen inflation.
In a letter Thursday, Eby urged Bank of Canada governor Tiff Macklem to consider the “human impact” of rate hikes, which the bank has employed as an anti-inflationary measure.
In the letter, Premier Eby points to a recent report by the International Monetary Fund. The report warns that “Canada now runs the highest risk of mortgage defaults and foreclosures among advanced countries.”
“While the role of the Bank of Canada is to make decisions about monetary policy, my role as premier is to stand up for people in B.C. and ensure their voices are heard as decisions are made that impact them,” said Eby’s letter.
“People in B.C. are already hurting,’’ he said. “In your role as governor, I urge you to consider the full human impact of rate increases and not further increase rates at this time.”
In his letter, Eby also raised concerns about the impact the rates will have on home building and current housing prices.
An increase in rates will impact the lines of credit used by builders to finance new housing construction and new private rental housing construction, meaning homes will cost more to purchase down the road.
“This quiet but devastating impact of rate increases will result in even higher housing costs, feeding inflation further,” Eby wrote.
The letter said that the danger of further rate increases is not just to homeowners with mortgages as they renew or lock in at higher rates. Renters, young people, seniors, families, and small business owners burdened with car loan payments or lines of credit who were just starting to find their feet after COVID are being pushed to the brink. As fixed mortgages are renewed, residential and commercial landlords will be pressured to offset their costs with more rental income, with devastating results for tenants.
Eby informed that he has also written to the Prime Minister to urge him to work with us to tackle the root causes of inflation. That means building more homes for people, strengthening supply chains, and making it easier and cheaper to move goods. So everyone can build a good life here in BC.
“On the ground in our province, interest rate hikes are causing more and more people to report they could not afford to cover an unexpected $500 expense, and who are moving from financial security into financial insecurity,” he said.
