Yahoo Finance One-third of Canadians say the BoC should hold rates at 5%: survey
Most respondents don't want to see rate cuts until inflation is further lowered
A new survey has found not all Canadians are counting down the days until the Bank of Canada starts cutting interest rates.
One-third of respondents (32 per cent) to a new Angus Reid poll, released on Thursday, say the central bank should hold its benchmark rate at five per cent and allow the economy to slow down in the hopes of further reducing inflation.
On the other hand, a slightly higher number of respondents (36 per cent) say "this is the wrong decision, and the Bank of Canada should decrease rates," the survey says.
Another 11 per cent of respondents say they want to see rates go up, while the remainder aren't sure what the right move is.
The Bank of Canada raised its key lending rate for the tenth time since March last year to its highest level since 2001.
While it's still up for debate whether the central bank is done hiking, most Bay Street economists note the Bank's core inflation measures remain stubbornly above target, so another September hike is on the table.
Mounting financial strain
The rapid jump in borrowing rates has given Canadians a crash course in monetary policy, with many feeling the financial pinch.
"At the beginning of the BoC's rate-hiking spree, there was more appetite among Canadians for interest rate hikes as they felt the effect of high inflation not seen in three decades," the survey said, adding that enthusiasm for rate hikes has since faded.
Bank of Canada governor Tiff Macklem has repeatedly acknowledged the financial pain higher borrowing costs are causing Canadians but says it's a necessary evil to bring the cost of living back in line with its one to three per cent inflation target range.
Angus Reid found three in five respondents (59 per cent) say the jump in rates will have an overall negative impact on their finances, particularly low-income earners.
"Canadians living in the lowest income households are the most likely to report they expect higher interest rates will have a severe negative impact on their personal finances at two in five (42%)," the survey said.
"However, a majority of Canadians of all income brackets believe the latest rate hike will have a negative financial effect on them."
To deal with tighter household finances, the survey found an increasing number of Canadians are cutting back on discretionary spending, delaying purchases of items such as a home, car or major appliance, and cancelling or scaling back their travel plans.
The online survey was conducted between July 13 and 17 and polled 1,600 Canadians who are members of Angus Reid's forum. The margin of error is +/- two percentage points, 19 times out of 20.
Michelle Zadikian is a senior reporter at Yahoo Finance Canada. Follow her on Twitter @m_zadikian.
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