The Bank of Canada should consider the impact a potential recession would have on regular Canadians as it sets monetary policy in response to high inflation, one Canadian labour leader and economist told BNN Bloomberg.

Bea Bruske, president of the Canadian Labour Congress, said her organization was disappointed to see the central bank again increase interest rates this week, sharing concerns that a potential recession – and related job losses – kick-started by the policy cycle could be especially harsh as Canadians struggle with high cost of living.

“When we're pushed into a recession, we know that workers lose jobs, and for workers who are having a hard enough time making ends meet at this moment in time, that's a terrible position to be in,” Bruske said in a phone interview.

 “There is a real concern about workers being able to actually meet their financial obligations.”

Bruske said her organization is hopeful that the central bank will pause its tightening cycle in January to give workers some relief, as many continue to get back on their feet after employment setbacks during the pandemic.

The central bank, which raised the overnight lending rate to 4.25 per cent Wednesday, has left the door open to further interest rate increases or a pause, depending on what future data reveals.

Bank of Canada Governor Tiff Macklem and some economists have pointed to the tight labour market and low unemployment rate as one sign that the economy has not slowed enough to ease up on the current monetary policy approach, suggesting that increases in wages could put more pressure on inflation.

But others like Bruske and economist Jim Stanford have challenged the view that the labour market is to blame for inflation.

Stanford, director of the Centre for Future Work, said the term “wage-price spiral” doesn’t accurately describe the current situation, as wage increases haven’t kept pace with inflation.

He recently authored a study that found a small number of sectors, including oil and gas, saw price increases that drove the bulk of Canada’s overall inflation in the past year, along with booming profits.

“I don't think the bank truly believes that wages are the source of the problem here, they’re just creating a narrative to prepare Canadians to suffer to fix inflation that they didn't cause,” he said in a phone interview. “Workers are the collateral victims of this strategy.”

Stanford predicted that the Bank of Canada will continue with an aggressive approach on interest rates as it focuses on bringing down inflation as its main goal, even as “dark clouds … continue to gather over the macro economy.”

But he argued that approach doesn’t consider the human impacts of a potential recession and the related loss of people’s livelihoods.

“This isn't something to be tossed out there lightly, to just say, well, we have to get inflation down, because it's our top priority,” he said. “We have to look at what the actual costs of disinflation are, and it's going to be severe."