Freeland Touts Strength of Canadian Economy Following Latest Interest Rate Hike

Freeland Touts Strength of Canadian Economy Following Latest Interest Rate Hike
Deputy Prime Minister and Finance Minister Chrystia Freeland makes her way to a cabinet meeting n Ottawa on March 28, 2023. (The Canadian Press/Adrian Wyld)
Matthew Horwood

Amid another rate hike by the Bank of Canada, Finance Minister Chrystia Freeland attempted to alleviate Canadians' financial concerns by highlighting the country's economic recovery since COVID-19 began.

"I absolutely understand the concerns Canadians have with mortgages today, and I understand the concerns Canadians have with inflation," Freeland told reporters in Ottawa on June 7.

"What I really think is important also for us to bear in mind is we are coming to the end of this difficult path out of the COVID economy. We are seeing inflation coming down."

On Wednesday, the Bank of Canada (BoC) raised its benchmark interest rate to 4.75 percent, claiming that policymakers were concerned its previous 4.5 percent rate was not sufficient to bring inflation back down to its 2 percent target. Canada's interest rate is now at its highest level in 22 years.

Freeland attempted to underscore why Canadians should be "confident" in the strength of the economy. She said Canada has the strongest economic growth in the G7, has the lowest deficit to GDP and debt to GDP ratios in the G7, has a triple-A credit rating, and recovered 129 percent of the jobs lost in the first month of the COVID-19 pandemic.

The finance minister acknowledged it had been difficult to get through the recession and inflationary problems caused by COVID-19 and Russia's invasion of Ukraine, but said there was "no country in the world" better positioned to navigate the challenges.

"We are very close to the end of this difficult time and to return to low stable inflation and strong steady growth," she said.

Freeland said the BoC foresees that Canada's inflation rate, which hit a peak of 8.1 percent in June 2022, will fall back down to 3 percent by the summer of 2023. “The destination is stable, low inflation and steady, strong growth. And that is the direction that we are heading," she said.

'A Disaster'

Conservative Leader Pierre Poilievre criticized the Liberals for their role in Wednesday's rate hike, which he called a "disaster for the many Canadians barely hanging on.”

The Conservatives have vowed to filibuster the government’s omnibus budget bill from passing in the House of Commons until it introduces a plan to balance the budget, bring down interest rates,  and promise no new carbon tax hikes.

“I will keep speaking and keep speaking and keep blocking this inflationary train-wreck until the prime minister rises with a plan to balance the budget and bring down inflation and interest rates,” Poilievre said.