Bank of Canada rate cut provides small B.C. businesses ‘glimmer of optimism’

Small B.C. businesses are clinging to hope after the Bank of Canada announced a seventh consecutive interest rate cut Wednesday.

While the move is seen as a temporary lifeline, experts warn that it may not be enough to ease the deep financial struggles many business owners are facing — especially when battling the ongoing pressures of U.S. tariffs and the lingering effects of the pandemic.

“BC small businesses have the lowest confidence among any provinces in Canada,” Bradlee Whidden, senior policy analyst for Western Canada at the Canadian Federation of Independent Business, told 1130 NewsRadio. “This announcement by the Bank of Canada is a glimmer of optimism in that otherwise bleak picture.” Whidden added.”

The central bank’s decision to cut its overnight lending rate by 0.25 per cent to 2.75 per cent is a move designed to ease borrowing costs for businesses and consumers. But Whidden pointed out this relief is unlikely to resolve the root causes of economic strain – mainly, the ongoing trade war between Canada and the U.S.

“To be frank, things weren’t good, especially in B.C., even before the threat of a trade war…so this [interest rate cut] has to be seen as a mitigating solution that will help lessen the impact of tariffs, but we’re still going to see a pretty substantial economic hit from this trade war,” he said.

And although lowering interest rates can stimulate spending, Whidden said it could also bring about inflationary pressures, particularly in an economy already strained by supply chain issues and rising costs.

“Inflation was very high not that long ago. By lowering interest rates [further], we could risk, revisiting that environment of prices becoming high, not due to tariffs, but due to an influx in the money supply,” he added.

But B.C. businesses are not without hope.

“What we can do is to try and look at what are the conditions that would make a company want to base and build their operations in Canada,” David Williams, vice president of policy at the Business Council of British Columbia, told 1130 NewsRadio.

Williams suggests reshaping tax policies, simplifying regulations and removing inter-provincial trade barriers to make sure businesses have access to the resources they need to stay competitive could help Canadian businesses.

“We have to understand the nature of the threat that we’re facing. This is about losing investment opportunities, losing hiring opportunities in the private sector…Donald Trump is coming for our industrial base,” he said. “We have to make a counter case for why companies should base and build their operations in Canada. That’s how we have to look at our industrial policies at our structural policies around tax around regulations and and conveying and open for business mindset.”