FLASHBACK: Poilievre's concerns about interest rate hikes dismissed by Bank of Canada head

In June 2020, Bank of Canada governor Tiff Macklem joined members of the House Finance Committee to discuss the government's response to the economic consequences brought on by the Covid-19 pandemic.

Conservative MP Pierre Poilievre pressed Macklem on the issue of interest rates, however instead of addressing the potential consequences of potential hikes, the BoC governor brushed off his concerns as "hypothetical."

"How much of an interest rate hike could the average Canadian household sustain," Poilievre asked, "before they would be unable to pay their mortgages, or other credit market debt that they hold?"

"Our focus is on supporting the recovery," Macklem replied. "The Bank of Canada has lowered interest rates to the effect of twenty-five basis points."

He went on to explain that the BoC had implemented a strategy of "large-scale asset purchases" in order to "restore good functioning in our debt markets" and to "lower interest rates."

"How many households would become insolvent with a 2 percentage point increase in interest rates?" Poilievre pressed.

Macklem dismissed his concerns, and accused him of making up "extremely hypothetical" scenarios.

"We have no intention of raising interest rates in the current circumstance," Macklem continued, chuckling. 

"Of course not," Poilievre shot back. "That's why I'm not asking about the current circumstance; I'm asking about the medium-term circumstance, sir. You've admitted that if inflation rises unexpectedly, you would raise interest rates … We need, as Canadian parliamentarians, to know what that would do for households."

Macklem once again dismissed Poilievre's concerns regarding rate hikes, suggesting that if Canadians wanted to remain financially stable all they had to do was get a job.

At the time, the interest rate was 0.25 percent, and it remained so until March 2022. Since then, the BoC has announced six rate hikes, and following the most recent on October 26, it currently sits at 3.75 percent. 

Speaking to reporters about the decision to raise rates yet again, Macklem warned that further increases are imminent, however, the exact amount would depend on a number of factors.

"The message to Canadians is," Macklem said, "look, we know inflation is too high, and we know it's hitting you everywhere … shelter, rent, groceries." He pointed out that two-thirds of the things the average Canadian buys have gotten more expensive and suggested that by raising interest rates and thereby slowing demand, prices will go down.