Opposition leader says prime minister raised false hopes of a prolonged low-rate environment
Conservative Party and Official Opposition leader Pierre Poilievre has accused the federal government of misleading Canadians on the topic of the central bank’s trendsetting interest rate.
Poilievre blasted Prime Minister Justin Trudeau’s previous assurances of a prolonged low-rate environment as something that ultimately raised false hopes.
“Canadians believed in what you said, Mr. Trudeau,” Poilievre said. “They believed that debt would not have any consequence, and that interest rates were going to stay low for a long time.”
The remarks came in the wake of the Bank of Canada’s interest rate hike on June 7, which pushed the policy rate up to its highest level in 22 years (4.75%).
The siren song of cheap loans led to Canadians taking on millions of dollars in new mortgages in 2021 and 2022, Poilievre said.
However, these mortgages proved insufficient in compensating for the sharp increases in residential asset values.
“The prices of homes doubled after six years of your government,” Poilievre said. “Canadians needed to borrow more than ever before to be able to buy those same houses.”
“This is on the verge of becoming a crisis,” he told his caucus. “Justin Trudeau, you and your spending, out of control debt and taxation are leading us head-on into a full-scale financial crisis and I will not let you do it.”
Freeland allays Canadians’ concerns
Finance Minister Chrystia Freeland acknowledged that Canadians might harbor some worries in response to the central bank’s 25-basis-point hike.
“There are a lot of Canadians who are anxious right now and who will be concerned when they see this step taken by the Bank of Canada,” Freeland said, as reported by Bloomberg News.
At the same time, Freeland assured that the labour market’s sustained robustness coupled with the “core strength and the resilience of the Canadian economy” will continue to provide most households with steady cash flows.
“Having a good job is the key to the wellbeing of every single Canadian and their family,” Freeland said. “It’s the key to being able to pay your rent or your mortgage.”
Freeland said that the BoC is still anticipating inflation to cool down to 3% by summer.
“We are coming to the end of this difficult path out of the COVID economy,” she said. “The destination is stable, low inflation and steady, strong growth. And that is the direction that we are heading.”
