This article was last updated on April 16, 2022
Canada: 
Oye! Times readers Get FREE $30 to spend on Amazon, Walmart…
USA: Oye! Times readers Get FREE $30 to spend on Amazon, Walmart…
The Bank of Canada has announced in a statement issued on Wednesday that Canadian housing is anticipated to have been overvalued by as much as 30 percent, but risks to the country’s financial system are still firm in light of a stronger U.S. recovery expected to help keep Canada’s economy out of trouble. According to the central bank, the recent crash in oil prices has failed to trigger a severe recession but it could lead to a sharp correction in housing prices.
The latest semiannual Financial System Review pointed out that depreciation of the Canadian dollar, which might come with lower oil, would help offset the impact to the economy. Governor Stephen Poloz highlighted that “we judge that the probability of an adverse shock has eased since our June FSR.” He alleged that “this mitigates our observation that some financial vulnerabilities appear to be edging higher, leaving our overall assessment of financial stability risk roughly the same as in June.” In addition to that, the central bank also identified household financial stress and a sharp correction in house prices as the No. 1 risk.
The bank pegged that the Canadian housing market, which did not go through the same correction that the United States did several years ago, is overvalued by 10 to 30 percent. However, it was highlighted that the overvaluations is similar to those of the past, when interest rates were also rising to combat inflation, except in the current situation inflation is well anchored.
Be the first to comment