Missed opportunity to push pause on rate hikes and put people first

December 7, 2022

BRUSKE: We should do everything we can to avoid job losses and a painful recession

OTTAWA––Canada’s unions reacted with disappointment to the Bank of Canada’s decision today to rush ahead with the seventh interest rate hike this year.

“Economists have urged the Bank of Canada to let the impact of previous rate hikes take hold before taking further action that could risk causing a damaging recession. It’s regrettable the Bank of Canada rejected that advice,” said Bea Bruske, President of the Canadian Labour Congress. “Moving ahead on another rate hike today could mean hundreds of thousands of workers losing their jobs and families losing their homes. There is a better way.”

Canada’s unions, alongside several prominent economists, have been urging Bank of Canada Governor Tiff Macklem to take a pause on further rate hikes until the effects of previous hikes could be determined. Canada’s unions have criticized the Bank’s ongoing warnings about wage growth driving inflation, while saying little about how corporate Canada’s pricing power has been fueling higher prices.

“Central banks raise rates to cool the economy and lower inflation. But the Bank of Canada has gone further and has waged a public relations campaign warning about the phantom menace of higher wages,” continued Bruske. “There is simply no evidence of this. Real wages are down more than 5% over the past two years and continue to lag behind inflation. Meanwhile, corporate profits have ballooned to record levels. It is time for a more balanced policy approach.”

Bruske added that the government also has a role to play in helping families through this cost-of-living crisis, in particular if the Bank’s monetary policy ends up pushing Canada into a recession. This should start with fixing EI and action to address the problem of concentrated corporate power allowing companies to raise prices as much as they can get away with.

“The government should take action against price gouging, including an excess profits tax that makes profiteering corporations pay their fair share. We can then invest these revenues in targeted help to those struggling just to get by and improvements to our broken Employment Insurance system,” concluded Bruske. “At this critical moment, Canadians are looking to policy makers in government, at the Bank of Canada, and in corporate boardrooms across the country to make decisions that put the wellbeing of everyday people first.”

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You can read Bea Bruske’s full opinion editorial on the actions of the Bank of Canada here: https://canadianlabour.ca/bea-bruske-bank-of-canada-should-pause-rate-hikes-now-to-avert-a-manufactured-recession/

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