<p>You sent <a href="https://www.cp24.com/news/bank-of-canada-raises-key-rate-half-a-point-to-1-and-warns-of-further-hikes-to-come-1.5859951" rel="nofollow noreferrer">https://www.cp24.com/news/bank-of-canada-raises-key-rate-half-a-point-to-1-and-warns-of-further-hikes-to-come-1.5859951</a></p>
<p>Since companies that make stuff rely mostly on credit to do that. Now they can't borrow money. So what they do is inevitably fire people. When they lay people off there is less jobs which reduces competition for jobs in the market. That leads to lower wages which leads to lower prices.</p>
<p>Why would a country like canada wnat to lower their own people's wages ? Especially when they have regained more than 100% of the pre-pandemic  jobs ?</p>

CC BY-SA 4.0
2022-04-14T15:58:47.380Z
The interest rate in Canada is 1%. That is still extremely low. Have you read anything about monetary policy, its uses and mandates before posting this?
Alex
CC BY-SA 4.0
2022-04-14T16:09:17.057Z
@Alex yeah I know the IS LM curve.
Ash Rivers
CC BY-SA 4.0
2022-04-14T17:19:02.120Z
Inflation is the highest in decades and unemployment at record lows. What does the IS-LM model suggest momentary policy should do? Answer: raise interest rates.
Alex
CC BY-SA 4.0
2022-04-14T18:03:42.053Z
@Alex but shouldn't the goal be full employment ? Is the only way to fix things for more people is to get some people fired/lose their wages ?
Ash Rivers
CC BY-SA 4.0
2022-04-14T22:14:26.980Z
Full employment does not equal zero unemployment if you think that is the case. You can Google concepts like NAIRU, or read the Wikipedia article about [full employment](https://en.m.wikipedia.org/wiki/Full_employment).
Alex
CC BY-SA 4.0
2022-04-14T22:33:06.637Z
And again, 1% interest is close to nothing. Look at this [historically](https://wowa.ca/bank-of-canada-interest-rate) (scroll down), rates were never lower than they are now. They were well above 18% for some time. 1% doesn't mean you cannot borrow money. If you have a credit card, what is your APR? Most likely well above 1% (the average is around 20% in Canada), and you still use it (or whoever uses credit cards which is a lot of people in Canada).
Alex
<macroeconomics><inflation><unemployment>
Does raising rates lead to lower wages?
Ash Rivers
# Does raising rates lead to lower wages?

(Asked by: username_0 on 2022-04-14)

You sent <https://www.cp24.com/news/bank-of-canada-raises-key-rate-half-a-point-to-1-and-warns-of-further-hikes-to-come-1.5859951>

Since companies that make stuff rely mostly on credit to do that. Now they can't borrow money. So what they do is inevitably fire people. When they lay people off there is less jobs which reduces competition for jobs in the market. That leads to lower wages which leads to lower prices.

Why would a country like canada wnat to lower their own people's wages ? Especially when they have regained more than 100% of the pre-pandemic jobs ?

**Tags:** macroeconomics, inflation, unemployment

> **Comments:**
> **username_1**: The interest rate in Canada is 1%. That is still extremely low. Have you read anything about monetary policy, its uses and mandates before posting this?  
> **username_0**: @username_1 yeah I know the IS LM curve.  
> **username_1**: Inflation is the highest in decades and unemployment at record lows. What does the IS-LM model suggest momentary policy should do? Answer: raise interest rates.  
> **username_0**: @username_1 but shouldn't the goal be full employment ? Is the only way to fix things for more people is to get some people fired/lose their wages ?  
> **username_1**: Full employment does not equal zero unemployment if you think that is the case. You can Google concepts like NAIRU, or read the Wikipedia article about [full employment](https://en.m.wikipedia.org/wiki/Full_employment).  
> **username_1**: And again, 1% interest is close to nothing. Look at this [historically](https://wowa.ca/bank-of-canada-interest-rate) (scroll down), rates were never lower than they are now. They were well above 18% for some time. 1% doesn't mean you cannot borrow money. If you have a credit card, what is your APR? Most likely well above 1% (the average is around 20% in Canada), and you still use it (or whoever uses credit cards which is a lot of people in Canada).  

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## 0 answers

