Canadians Feeling the Pinch of Latest Bank of Canada Rate Hike: Poll

A customer shops at a meat counter in a grocery store in Montreal on April 30, 2020. The Canadian Press/Paul Chiasson

A majority of Canadians say they will be financially hurting due to the latest Bank of Canada (BoC) rate hike, according to a new poll.

With another recent increase to the BoC’s key overnight rate—the tenth rise since the start of 2022—59 percent of Canadians say it will have a negative impact on their personal finances, according to the survey released by the polling firm Angus Reid on July 20.

The BoC has been raising interest rates in an effort to get inflation down to 2 percent, with the bank’s benchmark interest rate sitting at 5 percent for the first time since April 2001. However, Canadians may not be seeing the anticipated benefit yet.

“A higher policy rate increases the cost of borrowing—including credit cards, mortgages, lines of credit—for all Canadians. Eventually, it should also have benefits for Canadians’ savings accounts, but interest rates on those have been slower to adjust than they have in the past,” said Angus Reid in a July 20 release.

According to the survey, the majority of Canadians say the latest bank hike will have a negative impact on their finances.

Canadians who have mortgages are reporting the most financial stress, with 37 percent reporting they are having a difficult time making their payments. Within this group, another 89 percent say the latest bank rate increases will further exacerbate their financial difficulties.

Among those mortgaged homeowners who say their payments are currently “manageable,” 60 percent say the rate increase will negatively affect their ability to keep payments comfortable in the future.

A third (34 percent) of Canadians said they expected “significant challenges due to the rate hike.” Only 10 percent of Canadians said they expected positive results from the newest bank rate hike, while 22 percent said they would not be affected.

Renters

It isn’t just homeowners worried about paying their bills. Almost half of renters (45 percent) said they were having a difficult time making their rent payments. Within this group, 63 percent expect a worsening of their own financial conditions due to another interest rate boost, said Angus Reid.

The polling firm noted many Canadians are holding off on purchasing a home while waiting for interest rates to improve, which is also increasing the competition for rental housing amid what is already a nationwide shortage.

Of the Canadians polled, one-in-three said the BoC should keep the rate at 5 percent “and await the downstream economic impacts, the target of which is a further reduction in inflation.”

Eleven percent said they would increase the rate further.

Overall, the largest group of Canadians (36 percent) said the BoC should decrease rates, which is a 13-point rise in polling numbers since September 2022 when the policy rate was 3.25 percent.

The poll also found that half of Canadians (49 percent) are finding the costs of groceries difficult, with only half saying they can keep up with rising prices. Within households earning less than $50,000 annually, a majority (63 percent) report they are having issues with the cost of groceries.

The poll found that two-thirds of Canadians (68 percent) are going to delay making any major purchases. This is significantly higher than how surveys reported in 2019 and 2020, but not as high as in July 2022, when 75 percent of Canadians said they would not be making major purchases.

The news is also bad for charities. According to Angus Reid, 40 percent of Canadians will be cutting back their charitable donations because of difficulties in the current economy.