Bay Street money manager Gareth Watson, director of Richardson GMP’s investment management group, says the Bank of Canada needs to put its “foot down” in an effort to cool Canadians’ voracious appetite for debt, Business News Network (BNN) reported this past January.
“When it comes to consumer debt, you know what? We tell people to pay down their debt, we tell them to stop borrowing but they keep doing it,” Watson told BNN.
Statistics Canada reported that, in the third quarter of 2017, Canadians owed $1.71 for every dollar of after-tax income.
The central bank raised its key lending rate by a quarter point to 1.25 percent in mid-January, causing the banks to follow suit and raising the prime lending rate by a quarter percentage point to 3.45 percent, the CBC reported. This raises the rates that borrowers pay for mortgages while increasing earnings on things like savings accounts.
Bank of Canada Governor Stephen Poloz said in a speech last December in Toronto that the “high levels of debt will make the economy as a whole more sensitive to higher interest rates today than in the past.” ◊