Bank of Canada Abandons Interest Rate Targeting to Tame House Prices

The Bank of Canada's Senior Deputy Governor Carolyn Rogers stated that interest rates should not target house prices, as it would be too restrictive and risk imposing costs across the broader economy.

Rogers emphasized that the central bank's goal is to maintain 'low, stable and predictable inflation,' which she believes will help address housing affordability issues.

The Bank of Canada has reviewed its monetary policy framework and acknowledged that there are trade-offs in addressing house prices through interest rates. While raising borrowing costs can slow price growth, it can also slow construction, while rate cuts can stoke demand amid a dearth of supply.