For several years the leading issue on the minds of Canadians has been the rising cost of living, with food and housing emerging as the priorities on the list of boxes ticked by voters polled before and during elections. Politicians and activists have scrambled to blame corporate price-gouging and other factors for driving up prices across the economy.

In British Columbia, former premier David Eby and his Conservative successor, Lorne Doerkson, both promised to tackle the affordability crisis. Cost of living was a leading topic during the Toronto mayoral race, with national politicians such as Conservative Leader Pierre Poilievre joining the fray. Nationally, a new October Abacus poll put cost of living as the leading issue for 65 per cent of Canadians.

It may take a while — a year or two, or more? — before cost of living falls down the list of concerns of Canadian voters, but the foundation for more stable long-term inflation has been laid by the Bank of Canada, promising a future trend that will hold overall inflation rates within the existing 1.0- to 3.0-per-cent targets.

The decision Wednesday by the bank’s board of governors to slightly raise its overnight interest rate by a quarter point from 2.25 per cent to 2.5 was a mild but clear indication that the bank is committed to maintaining low inflation over the long term. “The best thing we can do,” said bank Governor Tiff Macklem, “is that we can get inflation down. We can prevent higher energy prices from spreading to the prices of other goods and services.”

Economists have differing views over whether the quarter point increase was really necessary. “We believe the bank should have waited,” said the C.D. Howe Institute’s leading monetary economists. Whether the bank’s rate hike is technically sound, and whether it serves the precise objectives laid out by Macklem is a separate matter from the Bank of Canada’s larger policy........

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