Bank of Canada Official Says Interest Rates Cannot Fix Housing
Carolyn Rogers stated that Canada is not close to restoring housing affordability and described interest rates as too blunt a tool to solve the crisis.
Bank of Canada Senior Deputy Governor Carolyn Rogers stated that Canada is not close to restoring housing affordability, despite the country being on the right track. Speaking to a business audience in Victoria, British Columbia, Rogers described the central bank's key interest rate as too blunt a tool to solve the crisis, noting that lower rates fuel price increases while higher rates block prospective buyers.
Rogers argued that restoring affordability requires a coordinated effort between the private sector, regulators, and multiple levels of government to increase housing supply, improve infrastructure, and reduce the economy's dependence on rising home prices. She acknowledged criticisms of the bank's pandemic-era policy of lowering rates to 0.25 per cent, noting that while cheap credit lowered barriers to buying, high immigration and supply restrictions also drove demand.
As the Bank of Canada enters a five-year mandate review with the federal government this fall, Rogers emphasized the need for the institution to better communicate the trade-offs of monetary policy to the public.
