Many Canadian real estate buyers and investors are struggling with higher interest rates. They got some bad advice, not from a Realtor or mortgage agent, but the Bank of Canada (BoC). In a now infamous address in October 2020, Governor Tiff Macklem assured households that rates would be low for long.
Households and businesses are now facing a policy rate 15x higher than expected. It wasn’t just bad advice, the Governor willfully ignored how central banks work. This was a borderline reckless comment that likely clouded many of the following decisions.
Bank of Canada Assured Households & Businesses Low Rates Until 2023
At the October 2020 speech, Governor Macklem assured households access to cheap credit. He explained the central bank will hold the policy rate at the lower bound (0.25%) until the inflation target was hit. It’s one thing to give the public a timeline, it’s another to reinforce that timeline by assuring people it will be low for long.
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