Despite simmering concerns that Canada’s housing market may be on the verge of overheating, it appears that the Bank of Canada’s benchmark interest rate, which has held steady at 0.25% for 11 months, is going to stay right where it is–at least for now.
The CBC’s Don Pitts reports that Bank of Canada Governor Tim Macklem has no plans to change the rate despite fears from some in the real estate industry who say too many people are buying homes only because they believe prices will go up–creating problems when interest rates start to rise again.
According to Pitts, Macklem does not appear overly worried, though he is monitoring the situation closely.
“In that low-for-long world, there are risks that housing could get carried away, so that is something we will be looking at very carefully,” Macklem told members of the Calgary and Edmonton chambers of commerce on Tuesday.
In his virtual address, Macklem also said he had no plans to hike the rate until Canada gets back on its economic feet–noting that the economy would continue to need monetary stimulus until–likely–2023.
Today, the financial website Baystreet.ca appeared to confirm Pitt’s reporting, saying that while Macklem is monitoring the housing market closely he believes that rising prices, especially for single-family homes, are still a long way from the heated market of five years ago.
The Bank of Canada is currently attempting to keep the rates paid on things such as mortgages low to spur more consumer spending by making use of its quantitative easing program.
With files from CBC News (Don Pitts)
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