Canadians are stressed about rising interest rates. Here’s what you can do

Renters, low-income households and younger Canadians are among those feeling the most anxiety about rising rates. Here's how to handle the impact on your budget.

The Bank of Canada’s aggressive interest rate hikes are not only a concern for economists and homeowners, as a recent survey shows the uncertainty of rising rates is driving Canadians’ financial anxiety to new highs.

But experts say there are steps you can take to lessen the burden as debt becomes more expensive and mortgage costs surge.

The central bank delivered a 50-basis-point increase to its policy rate on Wednesday, another oversized step and the sixth straight hike this year, marking one of the fastest rate-tightening cycles in its history.

The bank raises interest rates to increase the cost of borrowing and dampen spending demand in an effort to take some steam out of the economy and cool inflation, which remains well above its two per cent target.

Bank of Canada Governor Tiff Macklem conceded Wednesday in a press conference that higher interest rates do contribute to the burden Canadians are facing with high inflation.

While he hinted that the end to rate hikes might be on the horizon, he was clear that rates are not yet where they need to be — the risk of not raising them high enough, he said, could be a more painful option in the long run.

“We know adjusting to higher rates is difficult for many Canadians. We are watching that impact very closely. But unfortunately there is no easy out to restoring price stability,” Macklem said.

“If we don’t do enough, Canadians will continue to endure the hardship of higher inflation.”