“So much of what policy makers did was to enable those that were wealthiest to rebound fastest from the pandemic”, Atwater added.
While the Bank of Canada has provided unprecedented liquidity to the markets through open market operations in quantitative easing, boosting up the price of financial assets, over 1.75 million Canadians still find themselves unemployed.
The monetary actions of the Bank of Canada has largely benefited those whose net worth is tied up to financial assets. Equity markets have experienced a strong V-shaped recovery while interest rates bottomed to historic lows, allowing wealthier households to finance new assets at a low cost.
Finance spokesperson for the Conservative Party of Canada Pierre Poilievre released an accurate summary of the Bank of Canada’s open market operations:
Lower-income households with low net-worths have not benefited from the steep asset price inflation of the recent months. For many, this combined with a loss of income has led to a more dire financial situation.
For low-income and middle-class households, the asset price inflation has also made the prospect of buying a home more difficult to attain.
House prices appreciated 13% in 2020 with sales up 47%, reflecting a hot housing market that has become increasingly difficult to enter.
The combination of asset price inflation and low interest rates has provided a beneficial environment for high net-worth individuals to grow their wealth.
Meanwhile, the ongoing lockdowns in Canada have put hundreds of thousands of employees out of work or on furlough, penalizing largely low-income employees working in the service industry or in retail.