The Bank of Canada continues to try to wrangle rising inflation and, last week, raised its key interest rate once again.
Canada's year-over-year inflation rate did fall back from 8.1 per cent in June down to 7.6 per cent in July, however further increases to interest rates are expected this year.
We asked Larry Davey, President and CEO of Access Credit Union, if the strategy is working.
"I would say they are getting some of the results that they were looking for. It is a slower process than I think we are all looking for," he said. "We would like it to slow down and stop, and go back to what it was quicker than what's going to happen. I know there has been discussion that this could take a year to two years before we see inflation pull back as much as we would like, and that's a very slow process."
Davey noted, there are number of factors at play when it comes to tempering the national inflation rate, and he says the supply chain, wages, gas and grocery prices all fit in to the equation. "It's very seldom those things move in unison, so it takes a lot of levers by the Bank of Canada, the main one is interest rates, but it takes a lot of finagling by them to get the inflation rate back to what they are hoping."
And that process, added Davey, requires a delicate balance of slowing down the economy enough to make a difference while staving off a recession.
"You can see that if they pulled all the levers one way it would slow the economy right down, and then what happens is there's an impact on jobs, a huge impact on housing and so, they don't want that to happen. They want to just slow it and as a result, that process takes a while to go through the economy."
Fixed mortgages also play into the equation, said Davey, and is another reason why the process takes longer than one would expect.
"There are a lot of people that have fixed mortgages and they've had them for a year or two, and they might have three or four years more to go on their mortgage. So, not everybody is impacted with an increase in rates and that's why it only represents one thing the Bank can do, and doesn't necessarily have an immediate impact on the economy," he explained.