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  • If interest rates continue to climb, they could threaten economic growth, according to a report released Wednesday by Canada’s Senate
  • The report is meant to guide Canada’s federal institutions as they learn how to react to the current economic climate
  • The report finds further inflation is mostly driven by domestic factors
  • The panel agreed that rising interest rates could make the current housing affordability situation in Canada even worse
  • It also argues for more targeted public spending and financial restraint

If interest rates continue to climb, they could threaten economic growth, according to a report released Wednesday by Canada’s Senate.

The Standing Senate Committee on Banking, Commerce and the Economy authored the report after hearing from experts in several fields between September and December.

The results painted a grim picture as the Bank of Canada continues to raise the benchmark interest rate to reign in rising inflation.

The 12-member panel agreed that rising interest rates could make the current housing affordability situation in Canada even worse. It also asserted that increased competition could help fight longer-term inflation.

Bank of Canada Governor Tiff Macklem was among those to testify in front of the committee, which is chaired by Sen. Pamela Wallin, a former economic journalist.

“The experts agree: creating a more competitive environment for Canadian enterprises would be a hedge against future inflation and drive costs down for consumers,” Wallin said earlier this week.

The report is meant to guide Canada’s federal institutions as they learn how to react to the current economic climate.

Committee members agreed that further inflation is mostly driven by domestic factors and that public spending should be more targeted, amid fiscal restraint.

“Inflation is hurting Canadians. Understanding how we’ve gotten here — and what federal actors could have done differently — is an important exercise in accountability. There is clear evidence that federal spending must be reduced to avoid making the current situation worse,” committee member Sen. Elizabeth Marshall said in a statement.

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