Facing a one-two punch of sky-high prices on daily essentials combined with rising credit card, mortgage and other bills, the last thing Canadians need is a recession, which could cause massive job losses and economic upheaval. If the Bank of Canada raises interest rates on Wednesday, it will be the seventh time in the last nine months.
The Bank of Canada has raised interest rates more quickly than any other country. Millions of Canadians are facing huge increases in credit payments. Canadians owe over $2 trillion in credit according to a report. The Bank of Canada lost $522 million in the third quarter due to rate hikes.
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Macklem has been doing more than just raising interest rates when it comes to cooling the economy and slowing inflation. He has been arguing that wages are inflating inflation. There is no evidence that wages are increasing. Wage increases are not driving inflation according to Statistics Canada.
A Cure Worse than the Disease was a report from the Canadian Labour Congress. Evidence shows that wages are not the cause of inflation. Corporate accounts in Canada have been padded with record profits because of the high prices. Corporate profits in Canada grew three times faster than wages over the course of a year, reaching the largest share of GDP in Canadian history.
Macklem insists that the Bank of Canada will raise interest rates even if the economy goes into a recession. The bank's focus on achieving the target inflation rate of two per cent endangers the economy and could cause hundreds of thousands of Canadians to lose their jobs.
If the Bank of Canada is determined to cause an economic downturn, the pain will not be shared the same. Global poverty and income inequality are on the rise while people's purchasing power is falling behind according to the International Labour Organization. According to the ILO, real wages fell into negative territory for the first time in history, with low-income workers and households feeling the pinch most of all.
The ILO warns that this could lead to social unrest and put the Pandemic Recovery at Risk. The possibility of a manufactured economic crisis driving growing social unrest is not something that should be taken lightly. It will only make things worse if we pour more cold water on our economy now.
Macklem should consider the well-being of workers and families when he announces the Bank of Canada's interest rate decision on Wednesday. Macklem should push pause on more rate hikes. Take time to evaluate the impact of previous hikes before they are raised any further.
The Canadian Labour Congress has a female president.
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