Is it time for the Bank of Canada to start talking and thinking about raising interest rates?
It’s a worthwhile question, with yet another metropolitan Canadian city implementing major regulations to slow runaway real estate prices in recent months, and a crisis at an alternative mortgage lender.
The Bank of Canada’s management of this key policy tool has seen it keep interest rates at or under one per cent since 2009 in response to the global financial crisis.
The last couple years, its response to the oil price shock saw the Bank lower rates on two occasions.
Certainly, higher interest rates in Canada will hinder or slow economic growth.
But given consumer debt loads and over-burdened and indebted homeowners, the question has to be how much longer the Bank wants to maintain rates at record low levels, which threatens to do more harm than good.