“The Bank of Canada is in a really difficult position,” Freestone said. “They obviously want to aim for the prosperity of all Canadians, but that is very difficult to achieve with monetary policy because they only have one instrument.”
WHOwas most affected by inflation?
Economists widely agree that low-income earners suffer probably the most from rising living costs. But Freestone’s evaluation shows that middle earners have also felt the bite.
In 2023, employees within the fortieth to sixtieth percentile of the income distribution spent most of their take-home pay on essentials since 1999.
Christopher Ragan, an associate professor of economics at McGill University, says it is not surprising that Conservative leader Pierre Poilievre’s more pessimistic economic message resonated with Canadians, versus the optimism the Liberals tried to convey.
“People are still thinking about the pain they unexpectedly felt two years ago, and some of that pain is still being felt in interest rates,” Ragan said.
“So the government is focused on reducing inflation but is not talking about the fact that prices are still high. They focus on lowering interest rates but don’t talk about the people who were affected by the rate increase.”
Do Canadians ever feel good concerning the economy?
Stephen Gordon, an economics professor at Laval University, says people are likely to have a negative impression of the economic situation even when things are going well.
In his view, the Canadian economy has “dodged a bullet” by emerging from a period of high inflation without experiencing a serious economic downturn brought on by rate of interest hikes. He noted that folks’s income has increased, including the typical income.
