Bank of Canada holds rates steady but more needs to be done for working people

October 25, 2023

Bruske: Workers are at breaking point amidst affordability crisis

OTTAWA–Canada’s unions welcome today’s Bank of Canada decision to hold interest rates steady but warned that although inflation might be slowing down, the affordability crisis is not.

“Workers and their families are left waiting for the other shoe to drop every time the Bank of Canada makes a rate announcement,” said Bea Bruske, President of the Canadian Labour Congress. “With families facing increased housing costs and struggling to afford basic necessities, Canada’s unions have a clear message for Governor Macklem: Support workers and put them and their families at the centre of monetary decisions to ease their constant fear of more rate hikes.’’

The Bank’s ten consecutive and aggressive rate hikes in less than two years are still weighing heavily on workers and businesses.

The combination of high inflation and rising interest rates have broad economic implications. High inflation erodes the purchasing power of workers, leading to reduced spending. Meanwhile, monthly mortgage costs continue to rise, and spending power further diminishes, leaving workers with tough choices to make.

The Bank’s recent business outlook survey showed more and more businesses plan to reduce their investments, in part due to high-interest rates. Failing investments from businesses across the country will result in weaker demand for labour, which is what the Bank of Canada is targeting.

“The central bank’s actions since March 2022 have not only affected workers, but they have also been a significant driver of inflation,” commented Bruske. “The high-interest rates put forward by the Bank have led to increased borrowing costs for businesses. It’s workers and their families who bear the brunt of higher prices for goods and services, adding more pressure to Canadians who are struggling to make ends meet.’’

Bruske welcomed the Bank’s overdue acknowledgment of the role being played by corporate pricing practices in inflation. Corporations have been passing along higher costs and more leading to record high profits in a wide variety of sectors.

Bruske added that worker compensation is below where it was in 2019, while corporate profits are up almost 30%. Although the government doesn’t set interest rates, they do have a responsibility to help struggling workers and their families instead of prioritizing supersized corporate profits.

“We hear from workers across Canada that they are unable to pay housing costs or put food on the table. But high-interest rates aren’t the only problem these families are faced with. We must hold the government accountable and make sure it does more to support those struggling the most,” said Bruske. “Canadians are at breaking point. Canada’s unions are calling on all parties to work collaboratively to alleviate some of the pressure facing families. We will be looking for urgent action on affordable housing and publicly funded and publicly delivered pharmacare.”

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