Bank of Canada holds interest rates for now; some experts say increases likely needed

There was a short reprieve Wednesday for people with variable rate mortgages, loans and other debt.

Despite widespread speculation the Bank of Canada would start hiking its trend-setting interest rate Wednesday, that did not happen, although the governor all but promised it would next time.

"Today marks the final step in exiting from emergency policies," said Tiff Macklem in Ottawa.

"As such, we are removing our commitment to hold our policy rate at its floor of one-quarter of one per cent."

Although the idea of higher rates is unappealing for many people, some experts say it's probably just what the economy needs right now.

With inflation at a 30-year high, grocery shoppers have been struggling with the reality of bringing home fewer items for more money.

"It's more noticeable than it used to be," said shopper Susan Calpin in Bedford, N.S., Wednesday.

"It's shocking how expensive it is for groceries, and I hope they get it under control."

Financial experts have long suggested the seemingly endless supply of cheap money has been fuelling inflation.

"I think, if Vegas was putting odds on it, it probably would have been about 50-50," said Gerard Giovanetti, director of retail sales and business development for Atlantic Credit Unions.

With that bet now settled, experts acknowledge the threat of rising rates is probably starting to fall on deaf ears because we've heard it so many times before.

Still, there's growing evidence it's time to act.

"A lot of economists want to see some kind of movement at least at the lower end of the rates," said Giovanetti.

As usual, those with variable rate loans and mortgages would feel the impact the most, but even realtors say a little cold water wouldn't hurt a red-hot market like Halifax.

"The inevitable interest rate hikes are going to put a little bit of a damper on demand, but we've already had the mortgage tests implemented and that's going to do it as well," said Graham Coade, a realtor with Re/Max in Halifax, adding the current lack of inventory is the biggest reason for the overheated market.

There are dozens of bids for every property as soon as it's listed, and many sell for thousands, even tens of thousands, over asking.

There are no bidding wars at grocery stores, but there are well-documented supply issues for different reasons.

"Fortunately, my wife and I can afford it, but I feel really bad for single parents with children. The prices are going up," said Andy Anderson, a shopper on Wednesday.