Economist: Rate hike is coming and the goal ‘is to hurt people’

The Bank of Canada is widely expected to raise interest rates again this week and this economist warns that it’s the “new orthodoxy” as central bankers try to stamp out inflation.

“The goal of these rate hikes is to hurt people,” Armine Yalnizyan, the senior economist for Canadian Centre for Policy Alternative, told CTV News Channel on Tuesday. “So you will stop spending and that will cool the economy down.”

The interest rate announcement is scheduled for tomorrow and comes just over a month after the central bank hiked its key rate by a quarter of a percentage point.

Yalnizyan says that the strategy is a “time-honoured tradition” for how bankers “wrestle inflation to the ground,” but also thinks it’s a convention that’s beginning to be challenged as aggressive rate hikes fail to slow the economy.

“Everybody was predicting a recession by now,” Yalnizyan explained. “And yet nobody’s economy has started to falter.”

The aggressive series of hikes seem to be pushing many consumers to the brink however, as higher interest rates and a rising cost of living have stretched budgets and more than half of Canadians says they’re $200 away from not being able to pay their bills.

Yalnizyan warned that the message from the Bank of Canada is that “the beatings will continue until morale improves… We’ll keep hiking those rates until you stop spending.”

Watch the full one-on-one interview by clicking the video at the top of this article.