July 12, 2018 7:27 am

Bill Kelly: Did we really need that Bank of Canada rate hike?

Following news of interest rates increasing to 1.5 per cent, from 1.25 per cent on Wednesday, Bank of Canada Gov. Stephen Poloz said mounting trade tensions will have a larger impact on investment and exports than previously thought.


All the financial experts told us that the Bank of Canada was going to raise interest rates Wednesday and that’s exactly what happened, with a quarter-point increase.

The bank justifies the increase by quoting statistics that show our economy is doing well and employment numbers are up.

READ MORE: Bank of Canada delivers another hike, key interest rate rises to 1.5%

That’s the thing about statistics: you can make the numbers reflect almost any scenario you want.

Has the bank not seen the reports that indicate that the current tariff war is already creating uncertainty in the Ontario manufacturing sector, including the steel industry?

WATCH: A look back on past interest rates in Canada

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Are they not aware of the stalled NAFTA negotiations and the threat of even more punitive tariffs on the auto sector, which would be disastrous for our economy and employment numbers?

I think working families and business operators might have a very different view of the economic forecast than the rosy picture painted by the bank.

Wednesday’s hike wasn’t huge, but it is the fourth increase in the past 12 months, and the cumulative effect will further erode our disposable income.

READ MORE: Canadians should ‘buy smaller’ homes in response to interest hike, Bank of Canada head says

Mortgage rates have already increased again and the higher cost of borrowing is going to be problematic for those who dream of home ownership or for small business operators.

In these uncertain times, a rate increase may look good on some bank executive’s pie chart, but it’s going to mean hard times for many Canadian consumers.

Bill Kelly is the host of the Bill Kelly Show on Global News Radio 900 CHML

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