The Bank of Canada’s latest interest rate hike to 1.75 per cent — its fifth increase to the benchmark rate since last summer — is being criticized by some Alberta energy experts and politicians.
Tim Pickering, founder of Auspice Capital in Calgary, said the hike is just the latest hit to a province still recovering from a recession.
“What the Bank of Canada has done is really pushed Alberta further into a corner,” Pickering said.
While Alberta’s economy has recovered somewhat, the jobless rate is still high and oil prices are still low, at least when it comes to the price Alberta gets for its oil.
Alberta heavy oil is currently trading at price discounts of anywhere from US$40-50 compared to West Texas Intermediate, a grade of crude oil used as a benchmark in oil pricing.
“In this case, raising rates at a time when that differential, that discount in Canadian crude is so, so deep, the worst it’s been in history, that’s the worst time that interest rates could be rising,” Pickering said.
Alberta Finance Minister Joe Ceci agreed this is not the time for an interest rate hike.
“I don’t think Ottawa gets it that we’ve come through a really tough recession,” Ceci said.
Ceci added that Alberta should be supported while it’s in recovery mode, not challenged.
“This is absolutely the wrong time for the Bank of Canada to increase interest rates on Albertans,” Ceci said.
“Hard-working Albertans who have mortgages and have credit cards due, this will make life more expensive for them and for business as well.”
Albertans are also dealing with some of the highest debt levels in the country, something both Pickering and Ceci agree is not helped by the latest rate hike.