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On Wednesday, the Bank of Canada raised its interest rate for the eighth time in less than a year.
It went up 25 basis points — or a quarter of a percentage point — to 4.5 per cent.
That was the smallest increase since last March.
The central bank says it has been doing so to combat inflation, but its approach has been met with criticism from Canadian Labour Congress president Bea Bruske as well as Unifor president Lana Payne.
Both have said the rate hikes bear a negative impact on labour and the working class.
Bank of Canada governor Tiff Macklem signalled to a potential pause on the rate hikes in a press conference on Wednesday.
“They’re (gesturing towards) a pause, but they’re also saying they’re going to keep working behind the scenes with quantitative tightening, which just means they’re going to be selling assets that they already hold,” Jason Childs, an economics professor at the University of Regina, told Gormley.
“It’s a wait-and-see kind of announcement, actually.”
The Bank of Canada has said it’s trying to get inflation down to two per cent by 2024.
“I think that’s really optimistic,” Childs said. “A lot has to go right. And a lot of policies that we’re talking about right now have to be put on hold or just not come to pass.”
The headline rate of inflation (the measure of total inflation within an economy) was most recently recorded at 6.3 per cent in December. That was down from the high point of more than eight per cent in June.
The prime rate (which is the lowest amount that money can be borrowed commercially) also went up 25 basis points for some of Canada’s largest banks: TD Bank, Scotiabank, BMO, RBC, CIBC and National Bank.
All of their lending rates are now at 6.7 per cent.
“If you look at some of the bank forecasts, many of the big commercial banks, the big five are forecasting a very mild recession for this year,” Childs said.
“And you know, if commodity demand remains strong, particularly for Saskatchewan, we’ll come through it fine.”
Childs said those same banks are actually expecting Saskatchewan to grow over the coming year.
