From The Globe and Mail: 2024-05-01 21:02:29

Bank of Canada governor Tiff Macklem noted that high interest rates are affecting Canada more than the U.S., hinting at diverging monetary policies. Inflation in Canada is trending towards 2%, while the U.S. faces higher inflation rates. Canadian mortgage markets differ from the U.S. and Canadian households have higher debt sensitivity to rising rates.

The Bank of Canada is expected to lower rates in June or July, according to most Bay Street economists. This could lead to downward pressure on the Canadian dollar due to the divergence in rates between Canada and the U.S. However, Bank of Canada officials are not overly concerned about this impact, given the integrated financial markets.

Senior deputy governor Carolyn Rogers downplayed the risk of upcoming mortgage renewals creating financial stability problems. While a majority of Canadians have already navigated rate resets without significant stress, the next wave of renewals may pose challenges for those who secured mortgages at low rates during the pandemic. Banks and households are taking proactive steps to manage this risk.



Read more at The Globe and Mail: Tiff Macklem says higher interest rates having more bite in Canada than U.S.