The Bank of Canada has raised its benchmark interest rate again, to 4.5 per cent.
The move was widely expected by economists as the bank tries to wrestle record-high inflation into submission.
It’s the eighth time in less than a year that the bank has hiked its trend-setting rate, a move that will make borrowing money more expensive.
But at one quarter of a percentage point, it’s also the smallest hike since March, and thus a sign that the bank may be done with hiking rates for the next little while.
The bank said as much at a press conference following the announcement, with governor Tiff Macklem using the word “pause” to describe the bank’s monetary policy strategy at this moment.
“With today’s modest increase, we expect to pause rate hikes while we assess the impacts of the substantial monetary policy tightening already undertaken,” he said. “To be clear, this is a conditional pause — it is conditional on economic developments evolving broadly in line with our … outlook.
“If we need to do more to get inflation to the two per cent target, we will.”
If the central bank is indeed finished hiking rates, it’s not a moment too soon for people like Mezba Mahtab. He and his wife bought a home in Whitby, Ont. in 2021. They were renters paying just shy of $2000 a month previously, but they stretched got a variable rate loan to buy more space for their children.
Their original mortgage payment was about $3,000 a month — a bit of a stretch, but workable within their family budget.
Since then, however, their monthly payment has ballooned to more than $5,000, a level that Mahtab says gobbles up every penny he can get his hands on. “I’ve heard the term house poor before, but this is the first time I’m feeling it,” he told CBC News in an interview.
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He questions why the central bank keeps raising rates so aggressively, bringing pain on home owners like him while doing little to bring down the cost of living.
“I don’t believe it when they say this will control inflation, all it has done is…