There is a building consensus that the Bank of Canada may have started the ball rolling on higher interest rates too soon.
Officials within the Trudeau government fear that higher borrowing costs could inadvertently trigger an economic slowdown.
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Bloomberg reports concerns have surfaced that with low rates, consumers have become over-leveraged and much more vulnerable to even the smallest rate hikes.
The Bank of Canada has forecast the economy will grow to full capacity by year’s end, but the rate hikes could adversely affect the Trudeau government’s demographic base of support, who have grown up with the belief that money is essentially free, and have never felt the squeeze of higher interest rates.
Meanwhile, with a projected budget shortfall over the next four years totalling $102 billion, higher interest rates could take a real chunk out of government finances and leave the country vulnerable.