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Bank of Canada deputy governor: restoring housing affordability still 'a way to go', monetary policy 'too blunt' a tool
Senior deputy governor Carolyn Rogers told a Victoria audience on Oct 1 that Canada is on the right track but far from the goal; rising prices push rents up while falling prices shrink household wealth — 'a trap.'
Why it matters
Senior Bank of Canada deputy governor Carolyn Rogers said on Thursday that Canada is "on the right track" toward restoring housing affordability but "still has a way to go and needs more time," in a speech to a business audience in Victoria, British Columbia — the central bank's latest framing of the housing crisis.
Full report
Rogers said restoring affordability will require more supply, better planning and infrastructure, regulations that protect resilience, and incentives that do not add demand to a market already short on supply. She described the housing dilemma: as house prices rise they push rents higher and limit people's ability to buy, yet if prices fall they shrink overall household wealth — "it feels a bit like a trap."
She stressed that monetary policy is "too blunt a tool" for housing affordability: interest rates can influence demand across the economy, including housing demand, but cannot precisely fix supply shortages, and there are no simple fixes to the monetary policy framework that can help. She acknowledged the BoC needs to explain these trade-offs better and be clear with Canadians about what monetary policy can and cannot do.
The affordability goal, she added, should be a policy mix that increases supply, protects resilience and reduces the economy's dependence on rising house prices.
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