7 June 2018

As you know, the Bank has raised its key lending rate three times since last July, and the forecasts of another increase are growing.

According to Poloz, the uncertain trade situation is the largest risk in the issue of setting monetary policy.

“In April report, trade was the main risk and nothing has changed that could ease this problem. Moreover, it became even stronger”, – Poloz added.

The U.S. introduced tariffs on steel and aluminum imports from several countries including Canada, and the NAFTA negotiations seem to slow down.

Although the BoC says the improvement of the two main financial system vulnerabilities (debt and real estate) is great news, the Financial System Review points to certain signs of speculation at the condo markets of Toronto and Vancouver.

These markets are still strong, while the detached market is slowing down following borrowing costs increase and stricter mortgage rules.

In Bank’s opinion, speculation may be pushing condo resales as investors expect prices to go up, and there’s a risk of fast sales in case the prices start falling.

Nevertheless, the central bank believes the market will stabilize supported by strong labor markets.