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Bank of Canada sees housing-market slowdown as 'healthy'
BNN Bloomberg
Bank of Canada Governor Tiff Macklem said rising interest rates aren’t expected to derail the nation’s economy and may even produce a “healthy” slowdown in the housing market.
Macklem, speaking Thursday after the release of the central bank’s annual report on financial stability, argued home-price gains during the pandemic were unsustainable and produced vulnerabilities among new buyers who were forced to take on extremely high levels of debt.
“The economy can handle -- indeed needs -- higher interest rates,” Macklem said in an opening statement to reporters. “Moderation in housing would be healthy.”
Thursday’s report is the first comprehensive statement about the risks to Canada’s financial stability since Macklem began tightening policy in March. The Bank of Canada has increased its main policy rate to 1.5 per cent, from 0.25 per cent earlier this year, and is expected to rapidly hike borrowing costs to 3 per cent by October.