“The housing market has nine lives. Every time it’s supposed to slow down, something bad happens elsewhere that keeps interest rates low and the party’s still going,” Tal told BNN Bloomberg late last week.
A major factor in this dynamic is the Canadian workforce. Last month, around 81,000 new jobs were created across the country, far exceeding earlier predictions of roughly 20,000 new workers.
This was the largest 12-month gain since 2003, keeping the unemployment rate at just 5.7%, Bloomberg reported.
At the time, CIBC argued that this fundamental strength shields Canada from the worst effects of the trade war and other sources of global trade turmoil. In turn, these trends build the case for the central bank holding its overnight rate yet again in its meeting next month.
“If the Bank of Canada was on the fence about cutting rates in October, [these] jobs numbers might be one further push towards standing pat.”
However, Tal noted that while the BoC will prefer to avoid inflaming the housing market, the accumulated pressure of policy easing by other central banks will weigh upon any possible rate adjustment.
“Given where we are, given where the economy is, given where the Canadian dollar might be going if we’re not moving, they will have to make this decision.”
“You have to look at the economy as a whole and housing is only one part of it,” he explained. “The consumer is not there, clearly investment is not there, exports are missing in action and the only thing that’s moving is actually the housing market again.”
MBN
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