Ottawa, ON – The Hon. Michael Chong, Conservative Shadow Minister for Finance, released the following statement after the Bank of Canada announced it was increasing the overnight rate:
“Today the Bank of Canada raised interest rates for the first time in 3 years, hitting Canadians with higher mortgage and borrowing costs at a time when families are already struggling with the cost of living crisis. Emerging inflation, persistently high unemployment and sluggish economic growth are all evidence the government’s economic plan is not working.
“The Bank says inflation will remain above the target range for longer. Instead of putting in place a plan to increase growth, investment and incomes, Mr. Carney is adding more and more spending and debt, leaving Canadians with increasing interest costs – both through their taxes with interest costs headed to 13.6 cents of every tax dollar and through their mortgages, lines of credit and car loans.
“Weak economic growth combined with higher interest rates will make life more unaffordable for Canadians. Canadian households are already the most indebted in the G7, owing nearly $1.80 for every dollar of disposable income. Now, they face higher payments for mortgages, car loans and credit cards. The cost of a typical mortgage will go up $80.00 a month, a typical home equity line of credit $10 a month, and a typical new car loan $5 a month.
“Higher interest rates will also lead to higher payments on the national debt. Already, the Parliamentary Budget Officer (PBO) projects that interest payments will reach $83 billion by 2030-2031 – more than the government spends on the Canada Health Transfer. By 2030-2031, interest is projected to consume 13.6 cents of every dollar in federal revenue, costing a family of four nearly $8,000 annually compared to just $2,500 five years ago.
“Today’s announcement heightens the need for fiscal prudence from Mr. Carney. Worryingly, the PBO has noted the government fiscal rules have imposed ‘limited fiscal discipline on government spending and borrowing’ and projects the government will miss its own fiscal guardrail to reduce the deficit-to-GDP ratio.
“Mr. Carney cannot control global events driving up energy prices. But he can introduce supply side reforms to the economy to increase growth and productivity, leading to higher wages.
“Conservatives are calling on the government to control spending while introducing supply side reforms so that life becomes more affordable. Conservatives support making Canada the best place in the world to build and grow by fixing our broken tax and regulatory system.”