Canada’s economy to cool, force unemployment with rising interest rates, Canada Finance Minister

Representative Image of Canada's cooling economy. Image credit Unsplash/ Towfiqu Barbhuiya

Canada’s Finance Minister Chrystia Freeland issued a warning to Canadians on Wednesday about the slowing of a once red-hot economy due to rising interest rates to be seen in the coming months which would force some people to lose their jobs.

Recent interest rate hikes by the Bank of Canada will lead to increased borrowing costs for businesses and consumers alike, which will send shockwaves throughout the economy, Freeland said.

“Our economy will slow…Our unemployment rate will no longer be at its record low. That’s going to be the case in Canada…in the U.S. and…in economies big and small around the world,” Freeland said while speaking at an auto industry conference in Windsor, Ont.

“There are still some difficult days ahead for Canada’s economy. To say otherwise would be misleading.”

Like other central banks, including the U.S. Federal Reserve, the Bank of Canada’s interest rates this year has been rising to establish price stability and achieve its 2 percent inflation target.

Statistics Canada reported earlier this week that the rise of the Consumer Price Index (CPI) to 6.9 percent on a year-over-year basis in September, was marginally lower than the 7 percent increase reported the month before.

Although it is not possible to compensate every single Canadian for all of the costs of inflation driven by a global pandemic and Putin’s invasion of Ukraine, Freeland promised relief for the poorest Canadians who are most vulnerable to sudden spikes in the cost of food and rent.,

Pointing to the passage of Bill C-30, Freeland said this legislation should temporarily double the GST credit paid to low-income households to facilitate eligible people without children an extra $234 this year, while couples with two children will receive an extra $467 to offset rising costs.

She added that another bill before the House of Commons, C-31, would provide rent relief and send cheques to parents to cover the cost of their children’s dental coverage, while the availability of social programs like employment insurance (EI) would help people who lose their jobs in the coming economic disruption.