A recent survey conducted by Chartered Professional Accountants Canada (CPA Canada) revealed that an overwhelming majority of senior business leaders, about 90%, believe the Bank of Canada’s rate hikes are slowing down the nation’s economy. This significant statistic emerged just a day before the central bank’s announcement regarding its rate decision, which is anticipated to maintain the key overnight rate at a 22-year peak of 5%.
Businesses Struggle Amid High Rates
CPA Canada’s survey highlights that 71% of these leaders are experiencing adverse effects on their businesses due to the current rate levels. The Bank of Canada has maintained a consistent rate since a minor increase in July, amidst growing evidence of an economic slowdown. A recent survey by the bank focusing on business and consumer sentiments suggested that the current interest rates might be sufficiently high to manage inflation, hinting that policymakers might consider rate reductions to ease the burden on the Canadian economy.
Despite efforts to control inflation, Canada’s Consumer Price Index escalated to 3.4% in December, as reported by Statistics Canada. This rise surpasses the central bank’s inflation target, which is set between 1% and 3%.
Prolonged Economic Challenges Anticipated
The sentiment among these business leaders is not optimistic, with 73% of survey respondents from CPA Canada noting that inflation is harming their companies. Furthermore, 61% expect to continue facing negative impacts for at least another six months.
Rosemary McGuire, vice-president of research, guidance and support at CPA Canada, commented on the survey’s findings. She noted the general perception that persistent inflation, coupled with high interest rates, would keep exerting pressure on individual companies and the broader Canadian economy. This outlook contributes to a pessimistic overall economic forecast.
In summary, the survey conducted by CPA Canada paints a clear picture of the challenges faced by Canadian businesses due to the Bank of Canada’s rate hikes. The majority of business leaders surveyed express concerns over the economic slowdown and anticipate ongoing difficulties. This perspective underscores the need for careful consideration and potential adjustments in monetary policy to support the nation’s economic stability.
