“The Canadian bank is in a tricky position,” Freestone said. “Obviously they want to target the prosperity of all Canadians, but it’s very difficult to do that with monetary policy, because (they have) only one tool.”
WHOHas it had a significant impact on inflation?
Economists agree that low-income people suffer the most when the cost of living rises. But Freestone’s analysis shows that middle-income earners have also felt the bite.
By 2023, workers in the 40th to 60th percentile of income will spend a larger portion of their take-home pay on priorities than in 1999.
Christopher Ragan, an associate professor of economics at McGill University, says it’s no surprise that Conservative Leader Pierre Poilievre’s pessimistic message about the economy has struck Canadians with the optimism the Liberals have been trying to convey.
“People are still thinking about the pain they felt two years ago unexpectedly, and some of that pain is still there in interest rates,” said Ragan.
“Therefore, the government is focusing on reducing inflation, but they are not saying that prices are still high. They focus on lowering the interest rate but they don’t talk about the people who are harmed by the interest rate increase.”
Have Canadians ever felt better about the economy?
Stephen Gordon, a professor of economics at Laval University, says that people often have negative views about the state of the economy even when things are going well.
In his view, the Canadian economy “dodged the bullet” by coming out of a period of high inflation without facing a major recession due to interest rate hikes. He noted that people’s wages have increased, including average wages.
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