The Bank of Canada's warnings about coming interest rate hikes may already be reaping benefits, including changing the behaviour of consumers, governor Mark Carney says.
The central banker says in a speech about the advantages of signalling future intentions, and its limitations, that his persistent warnings about future interest rate hikes may be influencing the types of mortgages homebuyers are acquiring.
He noted that the share of fixed-rate mortgages has almost doubled to 90 per cent this year, with a corresponding decline in variable-rate mortgages.
The central bank has not deviated from the one-per-cent policy rate since September 2010, but in the past year has warned that its next move, whenever it comes, will most likely result in higher rates.
"Our guidance indicates that some policy action may be necessary, encouraging a degree of prudence in household borrowing," Carney said in the speech to Toronto financial analysts.
"The share of new fixed-rate mortgages has almost doubled to 90 per cent this year, reflecting the combination of attractively priced fixed-rate mortgages and the tightening bias of the Bank of Canada."
Carney's reasoning is that the more transparent a bank is about its future intentions, the more likely players in the economy will act according to expectations.
Read more Business News
- Storm kills powerCentral Okanagan - 9:21 pm
- Hwy closed east of SicamousBC - 10:23 pm
- Storm photo galleryCentral Okanagan - 4:44 pm
- Rain shuts down cityKamloops - 4:15 pm
|QHR Technologies Inc||1.15||-0.04|
|Anavex Life Sciences||0.325||-0.005|
|Copper Mountain Mining||2.76||-0.07|
|Sunrise Resources Ltd||0.025||-0.005|
|Mission Ready Services||0.19||+0.01|
The mainstream media are finally waking up to something unusual in British Columbia – a labour shortage. If the experience of Alberta is a guide to our own future, the highly skilled labour will...
Photo: ContributedI have the pleasure of witnessing people delegate tasks quite often. Sometimes with tremendous success and sometimes with disastrous consequences. I have chaired a lot of committees...
Big Picture Euro debt woes re-emerge Europe’s debt woes jumped back into the headlines this week trumping other economic, geopolitical and corporate developments. Word that one of Portugal&rsquo...