B.C. Premier David Eby calls on Bank of Canada to halt interest rate hikes

British Columbia Premier David Eby is calling on the Bank of Canada to halt further interest rate hikes, saying people are “hurting,” and another rate increase next month might worsen, and not reduce, inflation.

In a letter Thursday to Bank of Canada governor Tiff Macklem, Eby urged him to consider the “human impact” of rate hikes, which the bank has employed as an anti-inflationary measure.

The Bank of Canada, an independent body, is set to make an interest rate decision next Wednesday.

“While the role of the Bank of Canada is to make decisions about monetary policy, my role as premier is to stand up for people in B.C. and ensure their voices are heard as decisions are made that impact them,” said Eby’s letter.

“People in B.C. are already hurting,” he said. “In your role as governor, I urge you to consider the full human impact of rate increases and not further increase rates at this time.”

The letter said the Bank of Canada had raised rates 10 times since March last year, with the current lending rate at five per cent, the highest in 22 years.

Eby wrote that a Statistics Canada update last month stated that the largest contributor to inflation in Canada was mortgage rates.

“A rate increase in September is more likely than not to lead to higher mortgage rates again, directly causing further inflation,” he wrote.

Sean Gordon, a Bank of Canada media relations consultant, said in a statement the bank has no comment on Eby’s letter “as we are currently in the blackout period ahead of our next interest rate decision.”

The Bank of Canada announces its key policy decision, the setting of interest rates, eight times a year.

Members of the bank’s Governing Council observe a blackout no-comment period around the time of the decisions, says the bank’s website.

Eby also wrote Thursday to Prime Minister Justin Trudeau calling for a targeted approach to fighting inflation, focusing on housing and infrastructure improvements.

The letter to Trudeau said a focus on such key sectors will have long-term anti-inflationary benefits while growing the economy and improving productivity.

“There are other ways for us to achieve cost stability, but they do require diligence and co-ordination,” said the premier’s letter to Trudeau. “The time is overdue for such an effort,” said Eby. “Ahead of September’s rate decisions, I suggest a robust and targeted approach focused on the largest contributors to inflation.”

Eby’s letter to Macklem said “unnecessary” further interest rate increases pose a danger not just to homeowners looking to renew mortgages but to renters, students, seniors, families and small business people looking to pay bills, just as they start to recover from the COVID-19 pandemic.

Wal van Lierop, a Vancouver-based venture capitalist, said further interest rate increases will hit most Canadians and affect future growth and investment plans of businesses and governments.

“These across-the-board interest rate increases are hurting Canadians, and, in particular, the middle class and everyone below that, and it is hurting government in trying to achieve the goals that they have set for things like affordable housing and fighting climate change,” he said.

Van Lierop said his company, Chrysalix Venture Capital, invests globally in industrial innovations that tackle climate change and help companies reach carbon-neutral targets.

He said he respects the Bank of Canada’s independence but the time has arrived for a more modernized approach to fighting inflation.

“The Bank of Canada has no plan other than trying to achieve a traditional goal of two per cent inflation,” said van Lierop. “While that was laudable in the 1980s, I think it is now up to the Bank of Canada to start to innovate and not just use the methods they have used in the past 50 years, basically a sledgehammer of all-across-the-board rate increases.”

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