RBC President and Chief Executive Officer Dave McKay says Canada’s housing crisis presents a longer-term risk to the overall economy.
In an interview with BNN Bloomberg, McKay said many people are experiencing difficulty finding shelter within the country. He says high housing costs are one of the top issues the country faces and worries it could drive people away and impact the overall talent available in the Canadian economy.
“If we don’t solve it, we put our entire economy at risk, in that it’s too expensive to live here, we don’t attract the talent, we don’t retain the next generation,” McKay said.
He said the real estate sector currently faces a “catch-22” as higher interest rates deter development needed to increase supply.
“There’s a huge demand for housing,” he said. “As we know it’s stabilizing house prices in what would normally be a down market. But we can’t satisfy that pent-up demand with more supply because rates are too high.”
McKay also highlighted that the permitting process takes too long and needs to move at a faster pace.
“It’s been a challenge for our country from business to construction. It takes too long to get permits to move forward,” he said adding that the slow process results in losing out on business to the U.S.
‘Soft landing’
In the near term, McKay said elevated interest rates are working to bring inflation down, although the process is “a little slower than we would like.”
“Overall, we appear to be fully on a path to engineer a soft landing for the Canadian economy,” he said.
Previous moves by the Bank of Canada to tighten monetary policy are working to ease inflation, McKay said.
“Higher rates have led to a repricing of business loans, have led to higher interest rates for mortgages, which has been difficult. That takes cash flow (out) of the economy and therefore the economy is slowing from a demand perspective as rates are working,” he said.
Despite the easing of inflationary pressures, he added the impact has been “offset a little bit” due to government deficits and “a million new Canadians coming in from abroad.” Those two factors, he said, add slightly to inflationary pressures.
“Still, we’re on track for rate cuts this summer and into the fall. I think that relief will be welcomed by Canadians and will help bring down mortgage rates and bring down overall costs of servicing a mortgage for Canadians,” McKay said.
However, even if interest rates are reduced, they are likely to still be high enough to weigh on the overall economy, he highlighted.
“Don’t forget, even if rates come down by 100 basis points or 50 basis points, that’s still tightening. A four per cent rate in the economy is still not an expansionary rate, it’s a tightening rate. And therefore that still will have an effect on the economy going forward,” McKay said.
TORONTO – Strength in the base metal and technology sectors helped Canada’s main stock index gain almost 100 points on Friday, while U.S. stock markets also climbed higher.
The S&P/TSX composite index closed up 93.51 points at 23,568.65.
In New York, the Dow Jones industrial average was up 297.01 points at 41,393.78. The S&P 500 index was up 30.26 points at 5,626.02, while the Nasdaq composite was up 114.30 points at 17,683.98.
The Canadian dollar traded for 73.61 cents US compared with 73.58 cents US on Thursday.
The October crude oil contract was down 32 cents at US$68.65 per barrel and the October natural gas contract was down five cents at US$2.31 per mmBTU.
The December gold contract was up US$30.10 at US$2,610.70 an ounce and the December copper contract was up four cents US$4.24 a pound.
This report by The Canadian Press was first published Sept. 13, 2024.
OTTAWA – Statistics Canada says wholesale sales, excluding petroleum, petroleum products, and other hydrocarbons and excluding oilseed and grain, rose 0.4 per cent to $82.7 billion in July.
The increase came as sales in the miscellaneous subsector gained three per cent to reach $10.5 billion in July, helped by strength in the agriculture supplies industry group, which rose 9.2 per cent.
The food, beverage and tobacco subsector added 1.7 per cent to total $15 billion in July.
The personal and household goods subsector fell 2.5 per cent to $12.1 billion.
In volume terms, overall wholesale sales rose 0.5 per cent in July.
Statistics Canada started including oilseed and grain as well as the petroleum and petroleum products subsector as part of wholesale trade last year, but is excluding the data from monthly analysis until there is enough historical data.
This report by The Canadian Press was first published Sept. 13, 2024.
TORONTO – Canada’s main stock index was up more than 150 points in late-morning trading, helped by strength in the base metal and energy sectors, while U.S. stock markets were mixed.
The S&P/TSX composite index was up 172.18 points at 23,383.35.
In New York, the Dow Jones industrial average was down 34.99 points at 40,826.72. The S&P 500 index was up 10.56 points at 5,564.69, while the Nasdaq composite was up 74.84 points at 17,470.37.
The Canadian dollar traded for 73.55 cents US compared with 73.59 cents US on Wednesday.
The October crude oil contract was up $2.00 at US$69.31 per barrel and the October natural gas contract was up five cents at US$2.32 per mmBTU.
The December gold contract was up US$40.00 at US$2,582.40 an ounce and the December copper contract was up six cents at US$4.20 a pound.
This report by The Canadian Press was first published Sept. 12, 2024.
