Upcoming mortgage renewals part of why BoC held rate at 5%: Macklem

OTTAWA — Bank of Canada governor Tiff Macklem says the central bank held its key interest rate at five per cent in part because of the effect a wave of upcoming mortgage renewals is expected to have on the economy.

Macklem appeared before a Senate committee alongside senior deputy governor Carolyn Rogers following the Bank of Canada's most recent interest rate decision and monetary policy report.

The governor says the central bank maintained its policy rate because it knows the effect of previous rate hikes are still filtering through the economy, including through mortgage renewals.

As more people renew their mortgages at higher interest rates, households are expected to feel the squeeze from rate hikes more directly, leading to more softness in the economy.

Macklem says the Bank of Canada does not want to see the country enter a recession, but a period of slower growth is necessary to fight inflation.

Recent data from Statistics Canada suggests the economy may have teetered into a mild technical recession as higher interest rates weigh on spending.

This report by The Canadian Press was first published Nov. 1, 2023.

The Canadian Press