Bank of Canada stands pat at 2.25%, but no immediate relief for debt-swamped Canadians
· Toronto Sun
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OTTAWA — With the Bank of Canada holding its key interest rate at 2.25% on Wednesday, cash-strapped Canadian households can enjoy at least a little predictability, but relief won’t come quickly.
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With household debt at near-record levels and grocery shopping becoming an increasingly costly chore, Canada’s central bankers have opted to stand firm as uncertainty, anxiety and looming tariff concerns bleed from the front pages to chequebooks.
“For the average Canadian, today’s decision means borrowing costs are staying where they are for now,” said Steve Hatzipantelis, vice-president of wealth at Your Neighbourhood Credit Union. “That provides some predictability, but it does not necessarily translate into any immediate relief for households already carrying debt.”
The bigger question, he told the Toronto Sun , is how Wednesday’s rate hold fits into the financial plan of the average Canadian household.
“Their debt level, their savings, their monthly expenses, and any upcoming financial commitments they may have, for example children going back to school,” he said.
“All of these play into that.”
Doom-spending and gloom
Amidst the pressures of inflation and Canada’s cost-of-living crisis, Hatzipantelis said family budgets are getting squeezed harder than ever — adding that many should consider tackling high-interest debts above all else.
“That’s what you really want to get rid of first, and you really got to prioritize it and try and tackle it as aggressively as possible,” he said.
Adding fuel to Canadians’ financial fire is the growing economic trend of “doom-spending” — impulsive, stress-driven purchases of non-essentials by those left feeling hopeless about their financial futures.
“It’s spending money on things you don’t really need because you feel stressed, pessimistic, and uncertain about the future,” Hatzipantelis said.
“The future looks really bad, there’s so much noise out there, so people think, ‘I might as well enjoy my money now.”
Aside from auditing discretionary spending, he suggested families also concentrate on building emergency “rainy day” cushions, and eliminating expensive debt.
“Canadians in a stronger financial position right now may still want to continue working towards longer-term savings and real investment goals,” he said.
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