Calgarians woke up to the feeling of deja vu with another interest rate hike.

The Bank of Canada raised the benchmark interest rate to 4.75 per cent Wednesday morning, an increase of .25 per cent.

The Bank of Canada stated that raising the policy rate should result in slowing “the flow of credit and allowing the demand for goods and services, so supply can catch up.”

Trevor Tombe, who is a professor of economics at the University of Calgary, questioned whether the move was absolutely necessary.

“(The hike) was certainly not inevitable, I want to make that clear. The tricky part here is that central banks when they change interest rates it affects consumption, investment rates and economic activity with a pretty long lag about a year in a half, two years,” Tombe said.

Tombe also shared his thoughts on social media.

“It takes a long time for monetary policy to work through the system, so the Bank makes its decisions based on where it thinks things are headed not where they are now, perhaps they think inflation will rise,” Tombe posted to twitter.

“Excluding mortgage rates, the 3-month average inflation is *much* better. In April, it averaged 3 percent. And over the past many months, has been well within target,” Tombe posted to Twitter.

The contribution of mortgage interest costs to Canada’s inflation rate has rose 0.8 per cent this past April according to Statistics Canada.

Impacts in Alberta

Finding stability between spending, inflation, and interest rates has certainly been a challenge in Alberta.

“Alberta saw its GDP rise by 0.7 per cent in the first quarter of 2023, growing at its fastest pace since the second quarter of 2022,” according to Statistics Canada.

This is all while Canada’s inflation fell from 8.1 per cent last year to 4.3 per cent this past March.

The decrease in inflation hasn’t resulted in a decrease in costs for Albertans.

In April the Consumer Price Index (CPI) was up 4.4 per cent compared to the same month a year earlier according to Albert.ca.

In the same time period, food was up 8.1 per cent and rent was up 3.5 per cent.

Meaghon Reid, executive director of Vibrant Communities Calgary (VCC), which is a not-for-profit organization that seeks to reduce poverty in Calgary, said this is the latest blow in the roughest stretch she’s ever seen in her career.

“In my 20 years working in the social service sector, I have never seen anything like this,” Reid said.

“We can expect the interest rates to keep going up at this rate, so what are we doing to make things smoother for everybody, and in this case Calgarians, because we are on the edge of the cliff and we’re rapidly falling off.”

The interest hike sees the potential to put further stress on Calgarians who are already struggling with rising rental rates. It could make the purchase of a home unaffordable for many looking to buy, thus putting greater pressure on the rental market.

“We have over 81,000 households that need affordable housing, that means they are paying more than 30 per cent of their income on their housing,” Reid said.

“That really has a huge mental health effect on people in terms of being able to even enjoy the daily things of life if you’re constantly worried about what’s coming at me next in terms of another unexpected expense.”

Reid said that they hear at VCC people are first sacrificing quality food to help pay for expenses like rent and electricity. Then they cut internet and then start defaulting on utility bills.