Bank of Canada signals possible rate increases

The Bank of Canada's policy statement, which pledged to keep interest rates at 1.0% for now, signalled that some small increases might soon be needed. This hawkish change from last month’s fairly dovish statement seems to have been directed at households, given the Bank’s repeated warnings about excessive household debt. Although it is clear that rate cuts are off the table for now, if the Bank did actually raise rates we suspect that it would have to reverse course again pretty quickly as the housing market slumped.