Canadians are feeling the pinch.
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 on Friday.
The survey of 1,521 Canadians found that 57 per cent of respondents say they are personally feeling the impact of rising interest rates, with 39 per cent saying that ever-higher rates are causing some anxiety over the impact on their finances. The poll found the remaining 18 per cent saying they are “worried sick” about the effects the rate hikes could have on them or their families. Of the group that is “worried sick”, 22 per cent make less than $50,000 annually.
At the same time, 43 per cent say rising interest rates are not a problem for either themselves or their family.
The Bank of Canada has been rapidly hiking its benchmark interest rate in the wake of skyrocketing inflation, issuing five consecutive hikes, four of them outsized. Since March, the central bank’s key rate has gone from 0.25 per cent to 3.25 per cent, the highest level since April 2008 when the Bank of Canada was slashing rates in the midst of the Global Financial Crisis.
“The biggest dilemma the Bank of Canada faces is not how to crush inflation but how to do so without crushing many Canadians who never expected such a rate escalation to occur,” Maru executive vice-president John Wright said.
“The ultimate impact may be viewed as a consequence to people for over-leveraging or indebtedness and undue risk, but it’s fair to say that while many have naturally predicted a rise in rates, few thought it would be so jarringly fast.”
While inflation may have peaked at 8.1 per cent in June, it is still well above the two per cent target set out in the Bank of Canada’s mandate. In a speech made earlier this month in Halifax, Bank of Canada Governor Tiff Macklem said spending needs to be slowed in the economy so supply can catch up with demand.
“Simply put, there is more to be done,” Macklem told the Halifax Chamber of Commerce last week.
While a majority say they are feeling the pinch from rising interest rates, the poll also found that nearly seven in 10 Canadians (69 per cent) would rather live with high interest rates than a high rate of inflation.
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 per cent, 19 times out of 20.
Alicja Siekierska is a senior reporter at Yahoo Finance Canada. Follow her on Twitter @alicjawithaj.
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