90% of business leaders polled say Bank of Canada interest rate hikes hurt economy

Bank of Canada Governor Tiff Macklem waits to appear before the Senate Committee on Banking, Trade and the Economy in Ottawa, Wednesday, Nov. 1, 2023. (The Canadian Press/Adrian Wilde) (Canadian Press)

90 per cent of senior business leaders surveyed by the Chartered Professional Accountants of Canada recently said the Bank of Canada's interest rate hikes have hurt the country's economy.

The estimate was released the day before the central bank's rate decision on Wednesday morning. Economists expect the bank to keep its key overnight rate at a 22-year high of five percent.

„Regardless of whether we are in a technical recession or not, there is a perception among top business leaders about the dire conditions of the Canadian economy,” Rosemary McGuire, CPA Canada's vice-president of research, guidance and support, said in a news release. On Tuesday.

CPA Canada says 71 per cent of respondents to its survey say current rates are having a negative impact on their own organization.

The Bank of Canada has kept rates steady after a quarter-point hike in July, amid growing signs the economy is slowing. Last week, the Bank of England's Business and Consumer Sentiment Survey suggested that interest rates may be on hold to bring inflation under control, indicating that policymakers may consider rate cuts to reduce pressure on Canada's economy.

Canada's consumer price index rose 3.4 per cent in December, Statistics Canada said. The central bank's inflation target is in the middle of a range of one to three percent.

CPA Canada found that 73 per cent of respondents to its survey say inflation is affecting their own company, while 61 per cent believe they will feel negative effects for at least another six months.

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„The perception that prolonged inflation combined with higher interest rates will continue to affect both individual companies and the Canadian economy as a whole will contribute to a negative overall economic outlook,” added McGuire.

Jeff Lagerquist is a senior reporter at Yahoo Finance Canada. Follow him on Twitter @jefflagerquist.

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