Economics
Poloz Underestimates Housing Slump, Capital Economics Says
- Bank may have to cut rates by 50 basis points this year
- Swap traders mostly bet on stable benchmark rate in 2019
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The Bank of Canada may be underestimating the extent of the cooling in the country’s housing market as well as its knock-on effects for the consumer-driven economy, according to research firm Capital Economics.
Sales of pre-construction units in Toronto and Vancouver slowed in 2018, making it harder for developers to secure financing for their projects, said Stephen Brown, the firm’s senior economist for Canada. That in turn is likely to impact employment and consumption, which accounts for about 60 percent of the country’s output.