In Canada, A Watershed Pause

In a watershed moment of sorts, The Bank of Canada paused its tightening campaign. Although the hold from Tiff Macklem was expected after the BoC tipped its hand in January, the occasion is worth marking. Wednesday was the first pause from a developed market central bank since the onset of coordinated rate hikes to combat the pandemic-era inflation. The BoC's final (for now) hike in January was the eighth of the cycle, and brought the total amount of tightening in Canada to 425bps. You're r

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3 thoughts on “In Canada, A Watershed Pause

  1. most people in canada have 5 year fixed term mortgage or shorter. so roughly every year you have 20% of the mortgage population fall into refinancing issues if interest rates remain high. canadian housing market seems like a house of cards to me.

  2. Imagine if the US had Canada’s immigration policies – labor market pressures could be resolved far more easily:

    In 2022, Canada admitted 431,645 new permanent residents (about 1.1% of its population), whereas the US only admitted about 1.0m new permanent residents (or less than 0.3% of its population)
    In Canada, annual immigration accounts for almost 100% of Canada’s labor force growth.

    The US has a massive competitive advantage (e.g., tens of millions of qualified immigrants who would move to the US tomorrow if given the opportunity) that it is unwilling to leverage. End result: Higher inflation for longer, followed by a more severe downturn than otherwise necessary.

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