Diversity should be more than a hashtag in virtuous social media posts. This buzzword deserves to have real weight and meaning in Canada, but getting there will take real work.

That’s especially true in the realm of religion where Canadians need to contend with two serious issues:

• Growing hostility toward faith and religious diversity
• The public nature of religious faith, not just its private or personal expression

If anything, as Canadian secularism has become bolder and more aggressive, respect for religious diversity has become timid and more tentative. A recent Cardus research brief, Toward a Hopeful Future: Facing Down Religious Hate, notes that anti-religious hate crimes annually reported to Canadian police more than doubled between 2009 and 2021. 

In fact, police-reported crimes targeting religious persons or communities hit a new high of almost 900 crimes in 2021. Jewish Canadians remain the most targeted group, anti-Muslim crimes saw significant increases between 2016 and 2017, and anti-Catholic crimes more than tripled between 2020 and 2021.

Cardus’s surveys with the Angus Reid Institute, meanwhile, have found an increasingly negative attitude toward religion among Canadians generally. Less than a third of Canadians now see religious communities as mostly positive contributors to society. Between 2017 and 2022 the proportion of Canadians who see religious communities as hurtful for society grew from 14 percent to 22 percent.

It’s also notable that Canadians who are religiously committed, regardless of which religion they follow, tend to view every religion (even those different from their own) as more beneficial than damaging to Canadian public life. By contrast, non-religious Canadians tend to view every religion (except atheism) as more damaging than beneficial.

To be clear, public opinion is not necessarily linked to hate crimes. Only a tiny fraction of Canadians commits these crimes. Yet it stands to reason that a declining respect for or acceptance of religion and religious persons emboldens such actions.

And yet, there is hope in the face of hate.

Ontario politicians took a step toward reducing social hostility to religion. Last month, Cardus organized a gathering at the Ontario legislature involving representatives of the Progressive Conservatives, Liberals, and New Democrats meeting with a diverse group of religious leaders. They mingled with Muslims, Jews, Sikhs, Baha’i followers, and Latter-day Saints, as well as Catholic, Orthodox, Evangelical, and other Protestant Christians. 

Importantly, political leaders welcomed all religious communities—and denounced intolerance and hatred of them. Implicit in their public statements is the belief that all these communities, which disagree fundamentally on theology and possibly on public policy too, play a constructive role in a healthy society. 

It’s all about respect amid disagreement.

Or, as Cardus put it in marking the role of faith while celebrating the 150^th anniversary of Confederation: “We can offer charitable critique if the conduct of other faithful people is at odds with Canadian tradition. But we must always vigorously protect the shared space in which all acts of faith occur, even those acts of faith required to disavow belief in the transcendent.”

Reducing social hostility toward religion is a continuing responsibility for all of us, including political, professional, business, media, and faith leaders.

That work will require acceptance of a simple fact: Faith and religion have a public dimension. They are not just personal and private.

Canadians may be pleasantly surprised to learn that faith and faith communities are a much more significant part of our social fabric than they realize. Some of the biggest and most famous hospitals in Canada would not exist today without the Jewish or Christian communities that started them. No government needed to ask them to do this. They did so as a religious expression. 

Consider also the Halo Effect—a measure of the socio-economic benefit that a religious congregation contributes to its local community.

Based on the most recent research, it’s estimated that for every dollar that a congregation spends, the local community on average receives $3.39 in economic benefit. This comes in the form of meal programs, housing, addiction counselling, space for community events, and many other areas. Across Canada’s tens of thousands of religious congregations, the estimated national Halo Effect is $18.2 billion.

While we cannot ignore disagreements over hot-button issues or injustices by religious communities, the Halo Effect reminds us of the long, quiet, public expression of religion in Canada that doesn’t make headlines. 

At this time of year, it’s Ramadan for Muslims and Passover for Jews, while Protestant and Catholic Christians are marking Good Friday ahead of celebrating the resurrection of Jesus Christ on Easter Sunday. (Orthodox Christians will do so in a week’s time.) 

For believer and non-believer alike, this is an especially fitting time to recognize the public nature of religious faith and its contributions to our common life. It’s also a time to stand against social hostility toward faith. Doing so gives real weight and meaning to the Canadian commitment to diversity.

Next week the Bank of Canada will announce its third rate decision of the year. After signaling a pause in further tightening, it is unlikely to move off its current 4.5 percent policy rate.

But inflation is currently at 5.2 percent, far above the Bank’s target range of 1 to 3.

So why would our central bank pause further increases while inflation remains so high?

Two reasons: first, inflation pressures have likely already ended, despite the high headline rate most coverage focuses on; and second, it takes time for interest rate hikes to have their full effect—and today, thanks to the large number of variable rate mortgages out there, it might take longer than usual.

On the first point, the data is crystal clear.

Excluding volatile components like food and energy, and excluding the policy-driven increase in mortgage interest costs, inflation is consistently within or below the target range for most of the past seven months.

Excluding these items doesn’t mean they don’t matter, to be clear. Increases in the price of any item can strain household budgets. But excluding volatile components provides a better indication of where inflation may be headed. Excluding mortgage interest costs also narrows our focus to prices determined by supply and demand rather than policy. 

But even including food and energy, prices have increased at an average annualized rate of less than 0.3 percent over the past three months and only 2.5 percent over the past six months.

The reason reported inflation remains so high isn’t because prices are rapidly rising. Instead, it’s because the calculation reflects all of the monthly price changes for the past year.

So despite the sharp recent decline in the pace of price increases, we have to wait until the large increases in the first half of 2022 fall out of the calculation. If recent trends continue, though, we could see close to normal rates of inflation by this summer—so there may be no more need for the Bank to tighten further.

The second point—that rising rates take time to fully affect the economy—is even more important. Especially today.

Higher interest rates affect our spending in several ways. Borrowing is more expensive, so we spend less on items that we typically use debt to purchase (such as vehicles, renovations, new homes, and so on). Higher rates also make many of us poorer (look at home prices recently), which leads to lower spending. 

Recent estimates suggest that each one percentage point increase in the Bank’s policy rate tends to decrease consumption spending by 1.7 percent—but this effect can take well in excess of two years to fully materialize. 

Today, another channel may complicate this picture and lead to even longer lags than usual.

When rates rise, people pay more to service their debt and so have less to spend on other things. Those with variable rate mortgages are particularly exposed, but not right away.

Many households with variable rate mortgages—which account for roughly one-third of all mortgages, and most of which have fixed payments—now have monthly payments that are less than what they owe in interest. Depending on the Bank, somewhere between one-fifth and one-third of all outstanding residential mortgages are in this situation.

The result: instead of the total amount owing going down as payments are made, their mortgages are actually growing each month. This “negative amortization”, as it is called, will continue until rates decline. And when these mortgages come up for renewal, monthly payments may have to rise significantly to make up for it. 

In effect, variable rate mortgages shift some of the burden of recent rate increases well into the future. And there were a lot of such mortgages issued right before the tightening cycle began. In fact, a majority of new mortgages had variable rates.

Much depends on the path of future rates, of course, but consider someone on a variable rate fixed payment mortgage that started at one percent on a five-year initial term. If they renew at three percent at the end of their term, monthly payments could rise by roughly one-third or more. On a $400,000 original mortgage, I estimate that could mean an extra $500 to $600 per month more than what they paid during the first five years. 

It will take several more years for recent rate increases to fully affect these borrowers.

Of course, one option to avoid a sharp increase in payments may include extending the mortgage amortization at the time of renewal.^{1Be sure to talk with a professional advisor or mortgage broker; I’m not providing any advice here, just illustrating some general issues.} But even this comes with significant, though somewhat hidden, additional interest costs over the life of the now-longer mortgage.

Either way, thanks to the larger number of variable rate mortgages out there, pressure on many households to lower spending may continue even long after rates fall back to normal levels. 

The Bank of Canada’s job is never easy; it is especially difficult today.

A pause in any further rate increases is entirely warranted, and we may even see cuts in the not-too-distant future. But since rate hikes over the past year may have unusually long-lasting consequences for Canada’s economy, our central bank’s job of managing recent disruptions is far from over.