February 22nd, 2024

Interest rates not to blame for housing crisis, Macklem says

By The Canadian Press on February 1, 2024.

Bank of Canada Governor Tiff Macklem waits to appear at a Finance Committee meeting on Thursday, February 1, 2024 in Ottawa. THE CANADIAN PRESS/Adrian Wyld

OTTAWA – Bank of Canada governor Tiff Macklem says the central bank can’t solve the housing crisis with interest rates because the root cause is a supply shortage.

Macklem appeared before MPs on the finance committee today following its interest rate decision last week and faced multiple questions on housing affordability.

The governor acknowledged that high interest rates are feeding into higher housing costs, but he noted that shelter price inflation has been high both during times of low and high interest rates.

He says government should be focused on increasing housing supply to improve affordability, and warns policies that increase demand will worsen it.

Last week, the Bank of Canada continued to hold its key interest rate at five per cent and signalled it has begun considering the timeline for rate cuts.

It also singled out rapidly rising shelter costs as the primary reason why inflation is still above the two per cent target.

This report by The Canadian Press was first published Feb. 1, 2024.

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