Residential Market Commentary - BoC holding steady against headwinds
The key concern appears to be oil. The low price of crude is seen as a weight on the entire Canadian economy, although not as heavy a weight as in 2014 which led the Bank to actually cut rates in an effort to get things moving again. The situation with oil is part of a greater global uncertainty caused by trade tensions between the U.S. and China.
The Bank also cites a slowdown in Canada’s property market as an economic headwind. But, of course, that headwind is the natural and intended consequence of government intervention.
High household debt remains a serious worry for the BoC. It stands at nearly 178% after creeping slightly higher again in the third quarter of 2018. Most of that is mortgage debt and the Bank is keeping a close watch on how consumers are responding to rising rates.
By its own calculations the Bank figures 90% of the Canadian economy is working at capacity. That would seem to indicate the Bank will continue with its slow and cautious approach.