Bank of Canada repeats rate message, sees debt slowing
By Louise Egan
OTTAWA (Reuters) - There are signs that Canada's soaring household debt and its heated housing market - two of the biggest headaches for the country's policymakers - are decelerating, Bank of Canada Governor Mark Carney said on Tuesday
Speaking to legislators, Carney also maintained his stance as the most hawkish central banker in the Group of Seven rich countries, saying the bank is more inclined to raise interest rates than to lower them, although not any time soon.
He said there have been "mixed signals" on the issue of record high household debt in Canada since several moves were made by the federal government and its agencies.
Among them, the government tightened mortgage rules, the financial regulator introduced new mortgage lending standards, and the central bank has hinted since April at higher interest rates to come.
"And I say that in a positive sense ... there are some signs that accumulation of household debt is slowing," Carney said in response to a question from a member of the House of Commons Standing Committee on Finance.
"So the pace is slowing, it's still accumulating, and that some adjustment appears to be under way in the housing market. This requires continued vigilance by all parties and we intend to play our part in that," he said.
Canadian housing prices fell during the global recession, but the market bounced back stronger than before as the economy recovered faster than those of some other major countries.
Low interest rates spurred heavy borrowing as home prices rose, pushing the household debt-to-income ratio to levels seen in the United States before its housing market crash. Continued...