The purpose of higher policy interest rates is to lower inflation. But when the Bank of Canada hikes rates, it also pumps up the single biggest driver of inflation: mortgage interest costs.
Essentially, the Bank is keeping inflation 'inflated' because of its very own actions. If Alanis Morissette wrote a song about this, it would probably be called 'Ironic.'
Unlike most of its global peers, the Bank of Canada lets mortgage interest costs directly influence the consumer price index it targets. And those costs just rose at their fastest clip ever in the latest hiking cycle.
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