Unifor president asks Bank of Canada governor to lower interest rates: 'What are you waiting for?'

Unifor president Lana Payne has a simple message for Bank of Canada governor Tiff Macklem — slash interest rates, and slash them now.

Payne, whose union represents 315,000 workers in more than 20 sectors, has been outspoken in her opposition to interest rate hikes.

The inflation rate is currently under control, she said, but the bank's five per cent interest rate is continuing to contribute to the affordability crisis.

"Interest rates are a big piece of why it is housing is so expensive. So in some ways, right now what you're seeing is the Bank of Canada's actions are also causing inflation, particularly around things like the cost of housing."

Macklem opted to hold the rate steady in the Bank of Canada's last update, on April 10. Experts are now debating whether a cut will come in June or July. 

Members of the Bank of Canada's governing council were split on their options earlier this month, according to summary notes released after the decision. 

"Some members emphasized that, with the economy performing well, the risk had diminished that restrictive monetary policy would slow the economy more than necessary to return inflation to target," the summary reads. "Others placed more emphasis on the progress made in bringing inflation down."

Whatever happens in the next update, the summary notes said all members agreed that interest rates cannot be slashed suddenly in one fell swoop. It would have to be a gradual lowering over time, they said.

Regardless, Payne said it's crucial that the Bank of Canada signals a return to lower interest rates as soon as possible, so Canadians can be assured the affordability crisis is taking a turn.

"What are you waiting for, Tiff Macklem?" she said, referring to the Bank of Canada's governor. "Canadians need relief now. They needed relief in January and they needed it last fall, and we have not seen any reduction in the interest rate which is really … having quite a significant impact not just on the cost of living for working people but, you know, on the economy more generally."

Canada's unemployment rate rose from 5.8 per cent in February to 6.1 per cent in March, as more people looked for work and job growth ground to a halt, according to a Statistics Canada update earlier this month. Canada's economy lost 2,200 jobs in that time frame.  

Payne said interest rates are also having an impact outside housing, as well, pointed to areas like new infrastructure, where the cost of borrowing affects the scope and viability of projects. 

"Now the borrowing costs for those things are more expensive. So the more we can do to bring those rates down to make these things affordable, we can get back on track to to building the kinds of things that we need for the new economy and for the future economy in Canada."

The Bank of Canada is projecting inflation will hover around three per cent for the rest of the second quarter of 2024, before dipping below 2.5 per cent in the second half of the year. The rate is projected to return to two per cent in 2025.