Photo: The Canadian Press

Stephen Poloz, Governor of the Bank of Canada, holds a press conference at the Bank of Canada in Ottawa on Wednesday, Jan. 9, 2019.

Bankruptcies are up in Canada, the head of the Bank of Canada said this week, and he expects they'll rise even more as the central bank continues to hike interest rates.

Governor Stephen Poloz said he hears just how difficult higher borrowing costs can be straight from the people feeling the pain.

"We're acutely aware that our decisions affect everybody — they affect the financial well-being of everybody and many Canadians are carrying a high debtload," Poloz told reporters Wednesday after holding the bank's key interest rate at 1.75 per cent. "I don't have to work hard to remind myself of that. I get daily correspondence from people explaining to me what their situation is."

According to the bank, Poloz personally responds to emails and letters addressed to him from the public. Last year, for instance, about 200 people reached out to him directly. The most common themes of the messages are the state of the Canadian economy, inflation and interest rates, a bank spokeswoman said. If they aren't abusive and they include return addresses, he answers them.

Poloz's decision to leave rates unchanged this week is likely just a pause on the bank's rate-hiking path as the country deals with what he described as a temporary economic setback from a sharp decline in oil prices.

The central bank will continue raising rates once Canada gets past the soft patch and the economy builds new momentum, he said. A stronger economy has encouraged Poloz to raise the rate target five times since mid-2017 to keep inflation from eventually running too hot.

But in recent months, the number of Canadians who have run into financial trouble has edged up. Insolvencies have seen a slight increase after spending nearly a decade at very low levels. Following a long period of cheap borrowing, Canadians have amassed record piles of debt.

"On bankruptcy statistics, I understand that they have picked up," Poloz said when asked about the recent figures. "My understanding of the data points is that they're picked up from an extraordinarily low level. So, there is, in any point in time, always a certain number of unfortunate folks who may lose their job or what have you and go through this process.

"And it wouldn't be surprising to see things pick up a little bit when interest rates have risen."

Poloz added the bank has deliberately been very careful and very gradual in its hiking, while reminding people the low-rate era wouldn't last.

The Bank of Canada has said it will likely keep pushing its trend-setting rate higher until it hits the so-called "neutral" level between 2.5 and 3.5 per cent. That would mean between three and seven more quarter-point hikes.