Trade and Tariff information and support

  • Home
  • About Us
    • Board of Directors
    • Our Staff
    • Members
    • Work With Us
    • Contact us
    • BOOK A CONSULTATION
  • BUSINESS DIRECTORY
  • Member services
    • Security Services
    • Accounting and Financial
      Planning
    • Training and Skills Development
    • Website Services
    • Business Toolkit
    • Business Health Check
    • Best Practices
    • Health & safety
    • Move here/Leasing Opportunities
    • Book a Consultation
    • Hr & Workforce Development
  • Promote your business
    • DUKE Perks
    • Billboard Ad program
    • Digital Marketing program
  • Planning & Development
  • EVENTS
    • Events Calendar
    • Submit Your Event
    • Sponsor an event
    • OUR RECENT EVENTS
  • News
    • Newsletter
    • What’s Happening
    • DUKE Featured
    • Press Releases
    • Toronto Economic Calendar
  • Shop Here
    • MERCH STORE
    • DUKE Perks
Menu
  • Home
  • About Us
    • Board of Directors
    • Our Staff
    • Members
    • Work With Us
    • Contact us
    • BOOK A CONSULTATION
  • BUSINESS DIRECTORY
  • Member services
    • Security Services
    • Accounting and Financial
      Planning
    • Training and Skills Development
    • Website Services
    • Business Toolkit
    • Business Health Check
    • Best Practices
    • Health & safety
    • Move here/Leasing Opportunities
    • Book a Consultation
    • Hr & Workforce Development
  • Promote your business
    • DUKE Perks
    • Billboard Ad program
    • Digital Marketing program
  • Planning & Development
  • EVENTS
    • Events Calendar
    • Submit Your Event
    • Sponsor an event
    • OUR RECENT EVENTS
  • News
    • Newsletter
    • What’s Happening
    • DUKE Featured
    • Press Releases
    • Toronto Economic Calendar
  • Shop Here
    • MERCH STORE
    • DUKE Perks
Search
Close this search box.
Search
Close this search box.
Search
Close this search box.
Home | High Inflation and High Rates: What Businesses should Keep an Eye on

High Inflation and High Rates: What Businesses should Keep an Eye on

September 12, 2022
September 13, 2022

By Atul Oka, Senior Director of Strategy and Business Development, DUKE Heights BIA

As interest rates increase in an effort to battle high inflation, Canadian businesses face greater uncertainty. Interest rates can have an impact on a business’s cash flow, ability to borrow, growth strategy, and hiring plans. With the latest increase of seventy-five basis points (0.75%) by the Bank of Canada in September 2022, Canada now has the highest policy interest rate among all G7 countries. The current overnight rate of 3.25% is the highest since 2008, and with an inflation reading of 7.6% in July, the Bank of Canada is expected to keep raising rates until there is a sustained decrease in inflation.

Conversely, these increases while significant, have only been possible because of confidence in the economy’s recovery as evidenced by strong job growth and an unemployment rate at the all-time low of 4.9% (July 2022 reading). In a strategy similar to the one employed by the US Federal Reserve, the Bank of Canada has “front-loaded” the interest rate increases in an effort to reduce overall spending and thus the demand for goods and services.

Because rate changes have a lagging impact, there is now an increased risk of recession should the Bank of Canada continue to raise interest rates at the current pace. The CMHC is currently predicting a recession at the end of 2022. Whether there is a recession or just a slowdown, businesses in Canada will need to understand how the rate environment will impact their business.

The most important impact for many businesses that have taken on a high level of debt during the preceding period of low rates to boost capital investment and growth is their ability to service debt. In addition to higher input costs as a result of inflation and a possible slowdown in demand, businesses now face an increase in the cost of servicing existing debt and a decreased ability to access increased debt. Companies that have low margins and high debt will be hit especially hard by the potential “cash flow crunch”. Managing and forecasting cash flow will thus be critical for many businesses if they are to effectively mitigate this risk.

Wage inflation and the ability to hire new workers in the short term may also impact businesses during the initial interest rate cycle. Over the last two years, many workers left the labour force leaving businesses struggling to fill open positions. This in turn resulted in wage inflation as businesses attempted to retain and grow their headcount. Businesses may therefore continue to face human resource challenges until the labour market cools down which is only expected in late 2022 or 2023 when demand destruction leads to increased layoffs.

Another challenge that not even large international companies like Walmart and Target have been able to successfully manage is forecasting demand and thus inventory. Some businesses may hedge against inflation by accumulating inventory and locking in prices before they increase, or over-order, if supply chains remain unstable, but carrying a large inventory, can tie up precious funds if the inventory cannot be moved at the rate expected. Businesses should be cautious about excess inventory, especially in light of the manufactured slowdown in consumer and corporate demand as a result of higher interest rates.

It is thus important for businesses to incorporate these challenges and risks when creating, evaluating, or adjusting their business plan or strategy.

The DUKE Heights BIA offers free financial planning assistance for members. You can access this service HERE.

Loading...
  • Perks

Pay no tax on all Canadian-made seating!

  • April 15, 2025

Offer Details: Discount valid only on Canadian-made collections and merchandise. Please visit our website for store locations. Website: thechesterfieldshop.com Address:

Learn more
  • Health & Fitness, Perks

Family Physicians Accepting New Patients

  • April 10, 2025

Offer Details: Family Physicians Accepting New Patients. Call 416-222-6160 ext. 220/221 to schedule an appointment. Offer Exclusions: N/A Promotional Code:

Learn more
  • Small Business Help

U.S. Tariffs: Challenges, Opportunities, and Business Insights

  • April 9, 2025

April 10, 2024 … By Atul Oka, Senior Director of Strategy and Business Development, DUKE Heights BIA … Looking Ahead In

Learn more

DUKE Heights BIA between Dufferin & Keele and Steeles & Sheppard. It’s the northernmost business hub of the city of Toronto powering business growth and opportunities for the city and beyond. We promote the potential of the area, provide support to businesses in the area and inject new resources to tap into the potential of the community.

#WeAreDUKEHeights

Follow Us!

Terms of Use / Privacy Policy

DUKE Heights BIA

1275 Finch Ave W
Suite 303
Toronto, ON M3J 0L5

TEL: (416) 739-1621

DUKE Heights Newsletter

The DUKE Heights BIA newsletter is published every month to provide useful updates on news within the BIA and beyond, unique offers, and free events.

Newsletter

About Us

  • DUKE Heights BIA
  • Staff
  • The Area
  • We Are DUKE Heights
  • Work With Us

Our Services

  • Services
  • Employment Hub
  • DUKE Security
  • DUKE Perks
  • DUKE News
  • DUKE Talks
  • DUKE Events

News & Resources

  • News & Resources
  • What’s Happening
  • Featured
  • Newsletter
  • Press Releases

Planning & Development

  • Planning & Development
  • Public Realm Strategy
  • Area Studies
  • Area Development

Connect

  • Explore
  • Opportunities
  • Members
  • Connect
  • Contact Us

DUKE Heights BIA between Dufferin & Keele and Steeles & Sheppard. It’s the northernmost business hub of the city of Toronto powering business growth and opportunities for the city and beyond. We promote the potential of the area, provide support to businesses in the area and inject new resources to tap into the potential of the community.

Join Our Newsletter

About Us

  • Board of Directors
  • Our Staff
  • Members
  • Work With Us
  • Contact Us
  • Book a Consultation

Business Directory

Member Services

  • Security Services
  • Accounting and Financial Planning
  • Training and Skills Development
  • Website Services
  • Business Toolkit
  • Business Health Check
  • Best Practices
  • Health & Safety
  • Move Here/Leasing Opportunities
  • Book a Consultation
  • Hr & Workforce Development

Promote Your Business

  • DUKE Perks
  • Billboard Ad Program
  • Digital Marketing Program

Planning & Development

Events

  • Events Calendar
  • Submit Your Event
  • Sponsor an Event
  • Our Recent Events

News

  • Newsletter
  • What’s Happening
  • DUKE Featured
  • Press Releases
  • Toronto Economic Calendar

Shop Here

  • Merch Store
  • DUKE Perks

Terms of Use / Privacy Policy

X
X