Bank of Canada Governor Tiff Macklem conceded that rate hikes have hit the country’s homeowners hard, saying the impact of higher borrowing costs on consumers is a major reason why he chose to hit pause before the U.S. Federal Reserve.
In an interview with Bloomberg News, Macklem said the central bank needs time to gauge how households and businesses are adapting to higher rates before it makes any further moves.
The governor’s comments underscore the uncertainty faced by policymakers as the economy — and Canada’s richly-valued housing market — are tested by the highest interest rates in 15 years. Canada’s rate increases, which have moved the benchmark overnight lending rate to 4.5 per cent from 0.25 per cent in less than a year, have crushed home sales and sent prices tumbling in some markets. The national benchmark price has dropped 13 per cent since the peak, and buyers have largely stayed away until the future of mortgage rates becomes clearer.
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