It would be the first interest rate increase in 7 years.
Interest rates in Canada have not gone up since 2010.
That could all change next week.
The Bank of Canada will announce their interest rate decision on July 12, and many expect an interest rate hike.
A hike would come as household debt levels rise to new records, and could trigger a slowdown in the economy as the debt burden rises.
There would also be significant costs for taxpayers and the government. With large deficits forecast for many years, higher interest rates mean the costs of servicing our rising national debt will increase, thus contributing to even larger deficits and more debt.
Amid the talk of month to month economic figures, the underlying fragility of our economy is often overlooked. With much of our manufacturing sector bled dry, wages stagnant, and wealth inequality growing (Canada’s two richest businessmen have as much money as 11 million Canadians), more and more Canadians have turned to cheap credit in order to hold onto living standards.
Of course, that isn’t sustainable, and the Bank of Canada appears very close to raising interest rates – despite fears it could push us toward a recession.
At some point, we will have to confront the fact that our economy is no longer working for the vast majority of our citizens. However, because the system does benefit those in power, they will do everything to keep things as they are – despite the growing danger and instability underneath the surface.
As a result, the odds of a serious crisis that fully exposes the true vulnerability and fragility of our economy is growing by the day.