Lethbridge- For the first time since 2023, the Bank of Canada has increased its policy rate 25 basis points to 2.50 per cent, leaving some in the southern Alberta business community to wonder how that will impact the economy. Higher energy prices caused by the war in Iran have put inflationary pressures on most goods. While energy prices are out of the BOC’s control it’s doing what it can to tame inflation. “Even with this increase, it’s still low enough that it’s not restraining growth. But by increasing it, we’re going to help lean against or mitigate the pass through of higher energy prices into other goods and services,” said Bank of Canada governor, Tiff Macklem. The rate hike will likely increase mortgage payments for potential home buyers in Lethbridge. But with plenty of inventory currently on the market, that jump may even out with a lower purchase price. “Right now, we are seeing a lot more inventory available,” said Team View Lethbridge realtor Jennifer Brodoway. So, for buyers, they don’t really need to panic because things aren’t selling quite as fast as they were six months ago. “You’re going to have a lot more time to look,” she added, “and you’re going to have a lot more choices out there.” Costly capital investments The news is less positive for industries that rely on capital investments. Many in the agriculture sector rely on borrowing money for equipment. “Because our farm producers rely on a lot of borrowing in order to keep just the gears going of the, the, you know, annual economic cycle, it does impact our people,” said SouthGrow Regional Initiative executive director Peter Casseurela. Start of cycle? A one -time jump in the interest rate likely won’t have a major impact on borrowers, but if this is the first in a series of increases it could be cause for concern. “The real concern is in today’s quarter point increase, it’s whether this is the beginning of another long-term cycle of rising rates,” said Cassurella. “Southern Alberta’s got tremendous economic opportunities right now, particularly in agrifood and processing -- and there’s a lot of people looking at us right now for from an investment lens. And we just don’t want the cost of borrowing to become the reason those investments don’t happen.” The Bank of Canada hasn’t ruled out further rate hikes but will take it on a meeting-by-meeting basis. The next rate decision is scheduled for December 9.
