Speaking in Victoria, British Columbia, Carolyn Rogers made the case that the Bank of Canada can cool or heat housing demand, but cannot fix bottlenecks like permitting or limited building. She called the benchmark overnight rate a "blunt tool" and said housing should be an input to decisions, not the actual target. The bank's review of its monetary policy framework looked hard at affordability and found "no simple fixes" to the trade-offs that come with raising or cutting rates. The broader message: weak housing alone will not automatically sideline rate hikes if inflation pressures point the other way.
Rogers warned that trying to steer home prices with interest rates would stretch monetary policy beyond its abilities and spread pain to the wider economy. The bank also studied giving home prices a bigger role in its inflation work, but found that handling pieces like mortgage interest or rent differently brought trade-offs of their own. As she put it, "There was no simple change to our inflation measure that would do a clearly better job of capturing the affordability challenge Canadians are facing." The goal, she said, should be a policy mix that lifts supply, supports resilience, and reduces the economy's reliance on ever-rising house prices.
Canadian Real Estate Association data show a seasonally adjusted 37,738 home sales in August, and since 2022 the monthly tally has persistently run under the 10-year average. Prices are roughly 20% below their pandemic-era peak, when the central bank slashed the benchmark overnight rate to 0.25% as an emergency move. The policy rate sits at 2.25% today, with the next decision due Oct. 28.
Overnight swaps suggest roughly a 40% probability that meeting will deliver a hike, and they point to about 100 basis points more in increases by next September. Gasoline costs have kept headline inflation near 3% in recent months, and the bank has cautioned that the longer energy stays expensive, the more likely it is to filter into other prices. On a year-over-year basis, core inflation is hovering near the 2% target, though the month-to-month figures indicate pressures are starting to firm.
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Rogers emphasized that the best contribution to affordability is steady, predictable inflation and urged progress on supply. After the speech she said Canada should look at trimming red tape that holds back investment, adding, "We absolutely need to be thinking about how to streamline regulation," while noting "regulations are there for a reason too." For everyday buyers and homeowners, it adds up to a central bank that will keep focusing on inflation, a housing market still constrained by supply, and a rate path that could stay bumpy into next year.
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