OTTAWA: Canada’s soaring housing markets will help fuel dramatically stronger economic growth this year, but the Bank of Canada warns it’s a GDP adrenaline shot that could spell trouble down the road. When it comes to the red-hot Toronto market, the bank cautions that “speculation” appears to be playing a “larger role.” And the debt loads that Canadians are piling on, the bank says, will continue to grow.
Despite the warnings in the Monetary Policy Report, the bank is holding its key rate at 0.5 per cent — and later made it clear more stimulus wasn’t being considered. “A rate cut was not on the table at this time,” Governor Stephen Poloz said in a news conference. Even so, the cost of borrowing remains historically low as Poloz remains unwilling to sound the all-clear on the Canadian economy. Several prominent Bay Street economists are calling for a more hawkish Bank of Canada to tamp down expectations that interest rates will never go higher.
