Red-Hot Canadian Housing Markets Won’t Prevent Rate Cut
ByBank of Canada Governor Stephen Poloz says home prices won’t be determinative, but other reasons may stay his hand.
Photographer: Patrick Doyle/Bloomberg
Soaring home prices in Vancouver and Toronto won’t keep the Bank of Canada from cutting rates to stimulate the economy, if it comes to that.
That’s the takeaway from an interview Bank of Canada Governor Stephen Poloz gave theWall Street Journal after the release of the central bank’s policy decision on Wednesday, in which it left its benchmark rate unchanged at 0.5 percent.
“I don’t think of it as something that blocks us from changing interest rates,” Poloz said in response to a question about whether housing-related vulnerabilities would prevent a future interest rate cut. In a 2014 discussion paper (PDF), Poloz wrote that financial stability concerns of this nature “are not generally seen as a significant constraint on monetary policy actions.” …
