Bank of Canada Unclear How Higher Interest Rates May Impact Canada’s Housing Market

The Bank of Canada is uncertain about how higher interest rates will affect Canada's housing market, as reflected in its internal policy deliberations. While there is concern that tighter monetary policy could lead to a larger-than-expected decline in housing prices, factors such as strong immigration rates, household formation, and potential shifts from renting to buying homes may support continued growth. Bank of Canada Governor Tiff Macklem emphasized the need to assess economic developments relative to forecasts, indicating a willingness to raise rates further if inflation does not decline as expected. Despite a drop in overall inflation, food and shelter costs remain high, but the bank sees signs of improvement.