Pattie Lovett-Reid: Get Higher Interest Rates

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Canadians are frustrated as we begin the third calendar year of the pandemic.

Lockdowns, restrictions, higher prices for almost everything; and if that is not enough, there is also a steadily increasing number of absences in the workplace due to higher levels of infection and, of course, school closures.

Our physical and mental health is deteriorating, and for many, the situation goes beyond a perfect storm in the making. Many people probably feel that their household is in the middle of a tornado that is out of control. Any of these challenges would be difficult, but combined, they destroy pretty much every element of our lives.

Unfortunately, this feeling is not unique to Canadians only. Recent data from the United States indicated that inflation rose by seven percent in December year-on-year – the highest level since 1982.

Some hope this is the top, and it may well be, but such a high number is still a problem.

At the confirmation hearing of US Federal Reserve Chairman Jerome Powell, he pointed out that higher inflation was a barrier to achieving maximum employment, and higher rates would create stability and allow more Americans to get jobs.

It makes sense to me.

You have to believe that the same is true here in Canada. In a recent study by

Nanos Research Group for Bloomberg News, nearly nine out of 10 Canadians indicated that rising prices are more worrying than higher interest rates.

Does the Bank of Canada need more encouragement from Canadians than that to start moving rates higher?

The Royal Bank of Canada’s CEO, Dave McKay, reiterated Canadians’ approval of higher interest rates and told Bloomberg News: “We need swift action this spring as a series of addresses for rate hikes [permanent sustained inflation]. “

Currently, the market is pricing five rate hikes this year by the Bank of Canada. I say, come with them.

Would higher prices be so bad? I do not think. The current Bank of Canada interest rate is 0.25 percent and could potentially hit about 1.5 percent in 2022, a measly figure compared to inflation north of five percent.

Moving on courses would ironically put more money in your pocket.

Our economy may have ended 2021 on a strong note, but with the recent Omicron outbreak, the service sector will be hit again in terms of activity and employment, absenteeism and school closures will weigh on our economic growth in the first quarter.

If we can finally get a break, restrictions and infections may subside in February, and we all hope that this setback is just another detour on the road to recovery.

The optimist in me believes that inflation is approaching its peak and higher interest rates may help balance the housing market, while daily living costs may start to tick lower.

Canadians are tired and overwhelmed. Crossing fingers that there is light and relief, even if it happens in the form of higher rates, at the end of this very long tunnel.

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