BoC Rogers: High rates starting to work, housing and debt a worry

Reuters reported that Senior Deputy Governor Carolyn Rogers said in a speech at the University of Ottawa that higher interest rates are starting to slow the Canadian economy, putting pressure on households with elevated debt.

"It will take time to get back to solid growth with low inflation but we will get there," she said.

Key notes

Rogers said the bank was monitoring how a combination of high home prices and high household debt - both longstanding economic vulnerabilities in Canada - could affect the stability of the financial system.

"The risk of a trigger that may affect financial stability has increased" as rates have gone up, she said. "But there are good reasons to believe the system as a whole will be able to weather this period of stress and remain resilient," she added, citing reforms taken since the global financial crisis to shore up the system.    

USD/CAD update

USD/CAD has been a two-way business in the US session, trading between 1.3383 and 1.3453 on the day so far. At 1.3397, the pair is down by some 0.4% as the US Dollar retreated across the board while investors look past worries about China's COVID flare-ups.