The Canadian household debt servicing ratio hit a record high in Q3 2019. This is despite interest rates being near all time record lows. “The high household-debt load is the most important risk facing the financial system,” Bank of Canada governor Stephen Poloz said in a speech on Thursday, whereupon he was challenged by BNN Bloomberg’s Andrew Bell during the press conference.
“But aren’t you the man who is to blame for that?” Bell asked. “You kept those interest rates so low all those years. You’re the main author of that bubble, aren’t you?”
The answer from Poloz makes for a good laugh. There are obvious repercussions for keeping interest rates, aka the cost of money, so cheap for so long and those excesses have ultimately created vulnerabilities.
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