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Bank of Canada's rate hike pause supported by majority of Canadians: Yahoo/Maru poll

The central bank hiked its benchmark overnight rate by 25 basis points on Wednesday

Bank of Canada Governor Tiff Macklem takes part in a news conference, announcing an interest rate decision in Ottawa, Ontario, Canada January 25, 2023. REUTERS/Blair Gable
A majority of Canadians support the Bank of Canada's decision to put its aggressive tightening cycle on pause, a new Yahoo/Maru Public Opinion poll has found. (REUTERS/Blair Gable)

A majority of Canadians support the Bank of Canada's decision to put its aggressive tightening cycle on pause and stop hiking its benchmark interest rate, a new Yahoo/Maru Public Opinion poll has found.

The survey of 3,076 Canadians, conducted shortly before the Bank of Canada hiked its benchmark rate another 25 basis points, found that 57 per cent of Canadians agree that the central bank should pause raising rates for a few months so that the impact of the hikes can be fully assessed. Another 28 per cent say the bank should change course and cut rates, while 15 per cent say it should continue raising rates until inflation is brought down further.

The Bank of Canada's hike to its benchmark overnight rate on Wednesday brought the key policy rate to 4.5 per cent. The decision was the smallest increase since March 2022, and it came with a clear signal that the central bank is ready to pause its rapid rate hike cycle that saw it raise rates eight consecutive times. Still, Bank of Canada governor Tiff Macklem warned that the Bank is prepared to return to hiking rates if inflation is not tamed.

"If we start to see an accumulation of evidence that inflation is not coming down in line with our forecast, we're prepared to raise interest rates further," Macklem said.

While most of those surveyed support the central bank's move to pause its interest rate hikes, Canadians still expect the Bank of Canada to raise its rate to an average of 4.8 per cent, indicating that they believe the Bank has at least one more hike to go.

"While the majority of Canadians not unexpectedly agreed with the Bank of Canada's pause on further rate hikes until an evaluation of the cumulative impact has happened, they also don't believe that rates won't rise again," Maru executive vice-president John Wright said.

"There's no doubt that if the Bank is hoping for a soft landing recession, they're now like curlers who have thrown the rock and are watching to see if it needs more sweeping or if it will do just fine on its own."

The survey found that Canadians' opinion on what the Bank should do with regard to interest rates varied across homeowners based on their financing arrangements. A majority of homeowners with a fixed-rate mortgage agreed the central bank should pause its rate hikes (57 per cent), while 32 per cent say it should reverse course and 12 per cent say rates should keep rising further. Of those with a variable-rate mortgage, slightly more than half (52 per cent) say the Bank of Canada should pause its hiking cycle, while 42 per cent say the Bank should reverse course and cut rates and 6 per cent say it should keep hiking.

The survey of 3,076 Canadian adults was conducted between Jan. 23 and Jan. 24 and has an estimated margin of error of +/- 1.8 per cent, 19 times out of 20. The results were weighted by education, age, gender, and region to match the Canadian population, according to census data.

Alicja Siekierska is a senior reporter at Yahoo Finance Canada. Follow her on Twitter @alicjawithaj.

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