Posthaste: Many indebted Canadians think Bank of Canada interest rate cuts can't save them
Bank of Canada interest rate cuts may be coming too little, too late for many Canadians, two polls this week suggest.
The central bank reduced its benchmark interest rate to 4.75 per cent in June and another 25 basis point cut is expected tomorrow. But according to two separate surveys, many Canadians believe interest rate cuts won’t go far enough to relieve their financial strain.
“Even with a reduction in interest rates, we seem to have reached a point where debt has become unmanageable for over half of the population,” said Nancy Snedden, president of BDO Debt Solutions.
The survey done by BDO and CPA Canada found 52 per cent of Canadians don’t expect future rate cuts to provide relief, while another poll by insolvency trustee MNP Ltd. got a slightly higher result at 56 per cent.
The polls may reflect the uncertainty out there over how much interest rate relief actually is on the horizon. Some economists think the Bank of Canada will reduce its rate by one percentage point to 4 per cent by the end of the year and then gradually cut to 2.75 per cent by the end of 2025.
But the central bank has signalled that the end rate will be higher than the low interest rates seen over past decades.
The surveys suggest that those two years of aggressive rate hikes and high inflation have taken a toll.
“These results suggest lasting damage to consumer finances from years of inflation alongside rate hikes,” said David-Alexandre Brassard, chief economist at CPA Canada. “There will be ongoing consequences for the economy, even as the Bank of Canada lowers interest rates.”
The quarterly MNP Consumer Debt Index out this week dropped six points to 85, signalling that Canadians are more pessimistic about their debt.
Nearly two-thirds of
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