OTTAWA- Home price growth in Canada is “unsustainably strong” and higher interest rates are needed to moderate demand, a senior Bank of Canada official said on Tuesday, while also noting the inflationary risks of the country’s overheating economy.
Senior Deputy Governor Carolyn Rogers, answering audience questions following her first speech since joining the governing council, said the central bank does expect home price growth to moderate “a bit” as interest rates go up.
“We need higher rates to moderate demand, including demand in the housing market,” she said. “Housing price growth is unsustainably strong in Canada.”
The Bank of Canada made a rare 50 basis-point (bps) increase to 1 percent last month in its policy rate and made clear the rate will need to go higher. Money markets have fully priced in another 50 bps move on June 1, with a 15 percent chance of a larger hike. – Reuters
