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Bank of Canada faces political pressure to hold rates. But will it matter?

Two premiers have sent letters to Bank of Canada governor Tiff Macklem urging the central bank to halt rate hikes ahead of its next rate decision tomorrow.

Ontario Premier Doug Ford sent a letter on Sunday saying families and businesses cannot afford the “crushing impact of further rate hikes,” echoing a letter British Columbia Premier David Eby sent on Thursday.

Associate professor and founding director of McGill University’s Max Bell School of Public Policy, Christopher Ragan says it’s “unfortunate” that the premiers felt that sending these letters was useful.

Click to play video: 'Millennials set to face most economic pain in months ahead: RBC report'

Millennials set to face most economic pain in months ahead: RBC report

Ragan says it brings a political element to monetary policy decisions, which are supposed to be taken independent of government.

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The Bank of Canada is an independent institution that receives its mandate from the federal government and is responsible for maintaining a two per cent inflation target.

The central bank is set to make its interest rate decision tomorrow and is widely expected to hold its key rate steady as the economy begins to buckle under the weight of higher interest rates.

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