BoC Raises Concerns Over Inflation

Canadians high household debt levels are becoming a persistent concern despite the massive fiscal support offered by the federal government during the COVID-19 pandemic according to statements by a senior Bank of Canada official, Tuesday.

Deputy Governor Paul Beaudry said the prevalence of highly indebted households, which are defined as those with a debt-to-income ratio above 350%, was expected to improve during the first year of the pandemic as many Canadians accumulated savings and paid down debt, but that situation appears to be reversing.

Beaudry pointed out that the pressures keeping inflation higher could start moving away next summer. According to the deputy governor, the pandemic has intensified two of the main financial vulnerabilities faced by the Canadian economy; housing market imbalances and high levels of household debt.

The USD/CAD pair has not seen any noticeable reaction to the latest comments from BoC’s Beaudry. The pair has been under pressure in recent trade amid an ongoing rise in crude oil prices and briefly dropped back under 1.2700, where it trades flat on Tuesday’s session.