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No “Poloz Put?” Ignore BoC Warning At Your Peril

No “Poloz Put?” Ignore BoC Warning At Your Peril

Governor Stephen Poloz’s warning last week that the Bank of Canada wouldn’t backstop fluctuating stock markets drew little attention.

“Is there a Poloz Put?” the central bank head asked rhetorically. “No.”

At first glance, the fact that only one BNN Bloomberg producer and a few smaller media picked up the story is hardly surprising.

Canada is a mere bit player in global central banking and financial markets, and the opinions of any Canadian official generally carry little weight outside of local circles.

However, in December 2017 Poloz provided investors a similar warning about Bitcoin, then trading near its all-time high, but which subsequently fell by more than 80%.

Investors would thus be foolish to ignore him now.

Consider:

One of the Fed’s main policy tools

First, a little background. The idea that governments are key drivers of stock prices may appear ludicrous to those who believe that Western economies are free markets.

However, as Moody Analytics notes, higher asset prices and resulting wealth effects are one of the Federal Reserve’s main policy tools for achieving its inflation and economic growth targets.

For U.S. stock traders operating today, most of whom have never seen a crisis that government hasn’t bailed them out of, the Fed’s most important manipulation is the existence of a tacit “put,” which ensures that asset prices won’t fall too far.

Former Federal Reserve Chairman Alan Greenspan, Ben Bernanke and Janet Yellen all intervened to boost asset prices at key points when the heavily-indebted U.S. economy appeared set to implode.

The Bank of Canada’s policies are less overt. While the central bank claims that it “does not target asset prices,” asset price manipulation is clearly direct “collateral damage” resulting from its other policy objectives.

…click on the above link to read the rest of the article…

BoC: 8% Of Canadian Households Owe More Than 20% Of The $2.1 Trillion In Debt

BoC: 8% Of Canadian Households Owe More Than 20% Of The $2.1 Trillion In Debt

BoC - 8% of Households Owe More Than 20% of The $2 Trillion In Canadian Debt
Canadian real estate debt hit a new high, and the news gets worse as they explain it further. The Bank of Canada (BoC) updated household debt numbers for March. In a speech this week, BoC’s Governor Stephen Poloz also gave further insights on the numbers. The record debt levels are concentrated in a smaller segment of Canadians. These Canadians are now in a “highly vulnerable” position, and they’re f**ked if they don’t start preparing for higher rates now.

8% Of Canadians Have Mortgage Debt Over 3.5x What They Make

In a speech this week, the BoC gave us further insights on the Canadian debt problem, and it’s worse than we thought. It turns out 8% of households have mortgage debt that’s more than 350% of their gross income. This segment of borrower represents “a bit more than 20 percent of total household debt.” BoC Governor Poloz stressed that these households need to understand how “personally vulnerable” they are, as rates rise.

Rising rates are already putting the pinch on households, and it should get worse. The BoC reiterated the “neutral rate,” which is the rate where policy is no longer expansionary, is between 2.5% and 3.5%. Assuming no “shock” to the economy, rates will get there. Currently we’re at 1.25%, so that would mean rates will double over the next few years. You know, if we don’t face a major recession. Then you’re in the clear on rates, but a whole other bag of issues will crop up. On that note, onto those climbing debt numbers.

Canadian Households Owe More Than $2.1 Trillion Dollars

Total household debt hit a new record, but the annual pace of growth continued to decline. The total balance at the end of March stood at a whopping $2.129 trillion, up $3.4 billion from the month before. The annual rate of growth is now 5.25%.

…click on the above link to read the rest of the article…

Poloz to Queen’s University debt slaves: don’t worry about the “poverty effect”

Poloz to Queen’s University debt slaves: don’t worry about the “poverty effect” - Peter Diekmeyer (19/03/2018)
Kingston – Bank of Canada Governor Stephen Poloz got a warm welcome following a key policy presentation at his alma mater last week

“These are exciting times,” Poloz told a large crowd at Queen’s University . “Students here will shape the future. I cannot wait to see how it turns out.”

Afterwards, during a press conference with local and student media, Poloz brushed aside speculation about a possible “poverty effect” caused by rising interest rates.

Poloz cited a strengthening Canadian economy and downplayed suggestions that central bank rate-tightening cycles—which crashed global stock markets in the early and mid-2000s—would do so again.

Yet while the extent of a “poverty effect” in the overall economy may be open for debate, there are growing signs that central bank actions are impoverishing Canadian youth.

Consider:

Trickle down central banking

During the 1980s, economists derided US President Ronald Reagan’s policies—which cut taxes in the hope that they would spur economic growth—as “trickle down economics.”

Yet the Canadian government has adopted similar tactics.

The Bank of Canada’s “wealth effect” policies are intended to drive up asset prices in the hope that richer consumers will spend more, thus boosting the overall economy.

For example, if a Queen’s University economics professor sees his stock portfolio double, he might then buy extra lattés at the campus Starbucks, thus creating more jobs.

Sadly, the wealth effect hasn’t been working for the country’s youth— 44% of the 4.5 million Canadians aged between 15 and 24 are out of work.

Worse, trickle down central banking requires constant borrowing, at a pace faster than GDP growth.

As Renaud Brossard , executive director of Generation Screwed noted recently, such policies stick Canadian youth with nearly all of the country’s debts.

…click on the above link to read the rest of the article…

 

Stephen Poloz Right To Be Worried

Stephen Poloz Right To Be Worried - Peter Diekmeyer

Bank of Canada governor Stephen Poloz cited numerous worries plaguing the economy during his speech to Toronto’s financial elites yesterday at the prestigious Canadian Club.

However, the title of Poloz’s presentation, “Three things keeping me awake at night” seemed odd, given positive recent Canadian employment, GDP and other data.

Poloz highlighted high personal debts, housing prices, cryptocurrencies and other causes for concern, along with actions that the BoC is taking to alleviate them. His implicit message was (as always) “We have things under control.”

But if that’s all true, then Canada’s central bank governor should be sleeping like a baby. So, what is really keeping Mr. Poloz up at night? Three possibilities come to mind.

The Poloz Bubble

Firstly, far from just a housing bubble, Canada’s economy shows signs of being in the midst of an “everything bubble.” Bitcoin, for example, hovered near CDN $23,000 this week. Stock and bond valuations are not far behind in their relative loftiness.

Worse for Poloz, who took office four years ago, his fingerprints are all over those bubble-like levels.

Canadian stock, bond and house prices were already at dizzying heights when Stephen Harper hired Polozwith the implicit expectation that he would juice up the economy, in preparation for what Canada’s then-Prime Minister knew would be a tough upcoming election.

Poloz didn’t disappoint, promptly delivering a nice Benjamin Strong-styled “coup de whiskey” to asset prices in the form of two interest rate cuts, which brought the BoC’s policy rate down to just 0.50% during the ensuing months.

Although Harper lost the election, loose BoC policy continues to provide the Canadian government with free money to borrow and spend as it wishes.

More broadly, the Poloz BoC’s current policy, like that of the US Federal Reserve, is to boost asset prices even higher in the hope that the resulting wealth effect will trickle down to spur economic activity among ordinary Canadians.

…click on the above link to read the rest of the article…

The Inconvenient Truth of Consumer Debt

The Inconvenient Truth of Consumer Debt

It’s acceptable to build infinitely high levels of household debt — as long as rates never rise.
Ready for a rainy day?Photographer: Anoek De Groot/AFP/Getty Images

Oh, but for the days the hawks had a hero in Sydney. Against the backdrop of a de facto currency war, the Reserve Bank of Australia stood as a steady pillar of strength. The RBA held the line on interest rates, maintaining a floor of 2.5 percent, even as its global central bank peers drove rates to the zero bound and beyond into negative territory.

The abrupt end to the commodities supercycle drove the RBA to join the global currency war. The mining-dependent nation’s economy was so debilitated that policy makers felt they had no choice but to ease financial conditions. In February 2015, after an 18-month honeymoon, the RBA reduced its official rate to 2.25 percent, marking the start of a cycle that ended last August with the fourth cut to a record low of 1.5 percent.

The Bank of Canada has taken a similar journey in recent years. It embarked upon a mild tightening campaign in 2010 that raised the overnight loan rate from a record low of 0.25 percent to 1 percent in September 2010. The bank maintained that level until early 2015. Two weeks before the RBA’s first cut, the Bank of Canada lowered rates to 0.75 percent. The January move, which shocked the markets, was followed in July 2015 with an additional ease to 0.5 percent, where it remains today.

Bank of Canada Governor Stephen Poloz, who replaced Mark Carney after he departed to head the Bank of England, explained the moves as necessary to counter the downside risks to inflation emanating from the oil price shock to the country’s economy.

Two resource-rich economies reacting similarly to body blows is intuitive enough. They eased the pressure on their given economies.

…click on the above link to read the rest of the article…

The Toronto Housing Market Is About To Collapse By This Measure

The Toronto Housing Market Is About To Collapse By This Measure

With the collapse of Home Capital Group focusing the world’s attention on the Canadian real estate market, nowhere is the subprime debt time bomb more likely to go off than Toronto, which as we recently noted “has gone nuts.”

Even Bank of Canada Governor Stephen Poloz (who declined to comment on questions about Home Capital Group and whether he’s worried about contagion), noted that Toronto is out control tonight while answering questions following a speech in Mexico City…

pretty sure recent gains in Toronto home prices were not sustainable and that the city’s housing market had elements of speculation

“Financial stability is part of the Bank of Canada’s monetary policy decision making, but the central bank’s primary mission is inflation targeting,… it would be odd to use interest rates to target home prices in just one city.”

Perhaps Mr. Poloz… But, as we noted previously, it doesn’t take a genius to figure out that this will end in tears.  Even the big Canadian banks are fretting. “Let’s drop the pretense. The Toronto housing market and the many cities surrounding it are in a housing bubble,” Bank of Montreal Chief Economist Doug Porter warned clients. But the bubble’s deflation would push the city into a fiscal and financial sinkhole

Jason Mercer, TREB’s Director of Market Analysis, explained the basic supply and demand problem:

“Annual rates of price growth continued to accelerate in March as growth in sales outstripped growth in listings,” he said.

“A substantial period of months in which listings growth is greater than sales growth will be required to bring the GTA housing market back into balance.”

…click on the above link to read the rest of the article…

The Bank of Canada Should “Cease and Desist”

The Bank of Canada Should “Cease and Desist”

0629poloz-300x2251“Beneath the symbol

We’ll all assemble

Oh how we’ll fly

Oh how we’ll tremble”

— Captain Beefheart, “Ice Cream for Crow”

If interest rates are the symbol beneath of which we all assemble, then there are some bad times ahead.

But Canada’s “leading economists,” say interest rates are “too blunt a tool” to cool the housing market.

Tomorrow the Bank of Canada will deliver a rate decision and an accompanying monetary policy report. Governor Stephen Poloz isn’t expected to raise rates anytime soon, but he’ll likely face some tough questions about the connection between low rates and the “hot” housing market.

Of course, he deserves every hard question thrown at him. And it’s nice that journalists are actually starting to question the obvious connection between low-interest rates and the housing bubble.

With Canadians across the country locked out of their local housing markets, and with foreign buyers using Canadian property to protect their wealth from destructive communist dictatorships, frustration needs an outlet and it looks as if Poloz and the BoC are, finally, in the crosshairs.

But that doesn’t mean Poloz will listen. After all, the central bank is supposed to remain “independent” from democratic government and popular opinion. Poloz is making his decisions based on his misunderstanding of the economy, not the will of the mob.

As Avery Shenfeld, CIBC Capital Markets’ chief economist, told BNN in an email, “The Bank of Canada will likely stick to its view that house prices are best dealt with through macro-prudential policies particular to that market, with the interest rate setting used to steer the economy overall,

Meaning, let the banks and federal government deal with the issue. The BoC will do what it can, but it will not include raising rates.

…click on the above link to read the rest of the article…

Bank of Canada keeps benchmark interest rate at 0.5%

Bank of Canada keeps benchmark interest rate at 0.5%

Central bank’s rate has impact on rates offered by commercial banks for loans and savings accounts

The Bank of Canada, lead by governor Stephen Poloz, kept its benchmark lending rate at 0.5 per cent on Wednesday.

The Bank of Canada, lead by governor Stephen Poloz, kept its benchmark lending rate at 0.5 per cent on Wednesday. (Adrian Wyld/Canadian Press)

Canada’s central bank stood pat today, electing to keep its benchmark lending rate at 0.5 per cent.

The Bank of Canada’s rate, known as its target for the overnight rate, affects what Canadian borrowers and savers are offered from commercial banks on their loans and investments.

BANK OF CANADA KEY OVERNIGHT RATEBroadly speaking, the bank cuts rates when it wants to stimulate the economy, and hikes rates when it wants to pump the brakes on inflation.

After standing on the sidelines for years, the bank unexpectedly cut its benchmark rate twice last year in an attempt to stimulate a Canadian economy waylaid by low oil prices.

Since then, the economy has showed signed of improvement, however, as the cheap loonie has helped manufacturers and exporters, and oil prices have stabilized around the $40 level in recent months.

In January, Canada’s gross domestic product grew by its biggest amount in more than two years, official data showed last month. That helps explain the new cautiously optimistic outlook from the central bank’s decision-makers.

BANK OF CANADA ECONOMIC OUTLOOK“It does appear that the positive forces at work in the economy are starting to outweigh those that are negative,” the bank said in its statement Wednesday. “First-quarter GDP growth appears to have been unexpectedly strong.”

The Canadian dollar reacted positively to the news, erasing earlier losses of about a third of a cent to trade hands virtually unchanged on the day, at 78.35 cents US.

While keeping rates steady for now, the bank hiked its forecast of how it expects the economy to perform this year.

…click on the above link to read the rest of the article…

Negative Interest Rates Already in Fed’s Official Scenario

Negative Interest Rates Already in Fed’s Official Scenario

The Germans, with Teutonic precision, call them “Punishment Interest.” Negative interest rates are spreading from the ECB’s negative deposit rate across the bond market and to some savings accounts in the Eurozone. The idea is to enrich existing bond holders and flog savers until their mood improves. Stock prices are allowed to get crushed by reality.

Negative interest rates destroy one of the most essential mechanisms in an economy: the pricing of risk. Investors end up taking huge risks with no reward. Many of them will get cleaned out down the road.

In Switzerland, punishment interest already causes “perverse unpredictable effects,” as mortgage rates have started to soar. It’s wreaking havoc in Denmark and Sweden. Bank of Canada Governor Stephen Poloz let the idea float that he’d unleash punishment interest to destroy the Canadian dollar. The Bank of Japan announced Friday morning – timed for maximum market effect – that it too would inflict negative interest rates on its subjects.

In the US, Ben Bernanke has been out there preaching to the choir about them. Over-indebted corporate America, except for the banks, would love this absurdity; it would allow them to actually make money off their mountain of debt.

“Potentially anything – including negative interest rates – would be on the table,” Fed Chair Janet Yellen told a House of Representatives committee in early November.

Fed Vice Chair Stanley Fischer has been publicly obsessing about them for a while. Monday, during the Q&A after his speech at the Council on Foreign Relations, he said that negative interest rates are “working more than I can say I expected in 2012.”

It seems to be just talk. But negative interest rates are already baked into the official scenario for 2016.

…click on the above link to read the rest of the article…

More Central Bank Trouble in Canada

More Central Bank Trouble in Canada

14546039298_5ab096c6a8_oYesterday, the Governor of the Bank of Canada Stephen Poloz surprised many by not lowering the target for the overnight rate to 0.25% from 0.50%. The central bank cut this rate twice last year in an attempt to stimulate the economy. During the past nine months the TSX index has fallen from more than 15,500 to below 11,800, the Canadian dollar has depreciated from US$0.84 to below US$0.69 and crude oil prices have fallen from US$60/bbl to less than US$28/bbl. Consumer prices for imported products are rising quickly and government tax revenues are falling. In other words, the circumstances that usually motivate the Bank of Canada to act did not trigger a response from authorities this time.

The decision on the overnight rate may make the Bank of Canada an exception among other central banks that have reduced their key lending rates to zero or less. Bucking the trend does not mean that Canadians are going to escape the consequences of seven years of an overnight rate of 1.0% or less.

It is widely expected the Federal budget is going to contain borrowing $15 billion in the next fiscal year, ostensibly to “stimulate the economy”. Borrowing by the provincial government in Alberta could easily be more than half the Federal level of borrowing. Incredibly, the provincial government in Quebec may be the most parsimonious of all provincial governments.

Governments have no wealth of their own that is not first taken from someone else. There are only three sources available: current taxpayers, future taxpayers and in the case of the federal government, creating inflation by selling government bonds to the Bank of Canada. Stimulus spending likely means that future taxpayers will be confiscated to a greater extent than they would be otherwise. Inflation will erode further the purchasing power of every Canadian dollar in existence. Initial recipients of stimulus transfers will benefit; most Canadians will not.

…click on the above link to read the rest of the article…

Canada’s “Other” Problem: Record High Household Debt

Canada’s “Other” Problem: Record High Household Debt

Earlier today, the Bank of Canada surprised some market participants by failing to cut rates.

True, the loonie was plunging and another rate cut might very well have accelerated the decline, further eroding the purchasing power of Canadians who are already struggling to keep up with the inexorable rise in food prices, but there are other, more pressing concerns.

Like the fact that some analysts say the CAD should shoulder even more of the burden as Canada struggles to adjust to a world of sub-$30 crude. In short, if Stephen Poloz could manage to drive the loonie lower, the CAD-denominated price of WCS might stand a chance of remaining above the marginal cost of production. Barring that, the shut-ins will start and that means even more job losses in Canada’s oil patch, which shed some 100,000 total positions in 2015.

Alas, Poloz elected to stay put, characterizing the current state of monetary policy as “appropriate.”

We’re reasonably sure that assessment won’t hold once the layoffs pick up and as we noted earlier, the longer Poloz waits, the larger the next cut will ultimately have to be, which means that if the BOC waits too long, Poloz may have to rethink his contention that the effective lower bound is -0.50%.

While there are a laundry list of concerns when it comes to assessing the state of the Canadian economy and the impact of either higher rates (the loonie is supported but growth is further choked off) or lower rates (the economy gets a boost but consumer spending is stifled as Canadians watch their purchasing power evaporate), perhaps the most important thing to remember is that Canada is now the most leveraged country in the G7.

According to a new report from the Parliamentary Budget Officer (PBO) the household debt-to-income ratio is now a whopping 171% which means, for anyone who is confused, “that for every $100 in disposable income, households had debt obligations of $171.”

…click on the above link to read the rest of the article…

Canada Rebels against the Destruction of the Loonie

Canada Rebels against the Destruction of the Loonie

The fear of “currency instability.”

“Without precedent” — that’s what National Bank of Canada’s chief economist Stéfane Marion called the wholesale destruction of the loonie.

The Canadian dollar is in a tailspin. Rarely has it tumbled so far so fast, and against so many currencies. The steepness of the CAD’s depreciation against the USD is without precedent, -33%, or 3.5 standard deviations, in 24 months.

In the two weeks so far this year, the loonie has dropped 5.8% against the euro, 5.3% against the greenback, and 8.6% against the yen. “Even the likes of Norway (+5.4% against the CAD) and Sweden (+3.9%) are mocking the once-mighty Canadian dollar,” Marion wrote in the note. “Australia and New Zealand? Not to worry, they are also gaining ground against the CAD.”

The Canadian dollar plunged to a fresh 13-year low last week and hasn’t recovered since, hovering at US$0.688, below $0.70 for the first time since spring 2003.

People are getting alarmed. A lot of consumer goods are imported, including 81% of fruits and vegetables. The plunging loonie makes them more expensive for Canadians: meat prices rose 5% last year, fruits 9%, vegetables 10%. The average household ended up spending C$325 more for food in 2015 than in 2014, according to the Food Price Report. And it’s likely to get worse.

When Stephen Poloz became governor of the Bank of Canada in 2013, he set out to hammer down the Canadian dollar. In 2015, he redoubled his efforts. He relied on ceaseless jawboning. He even invoked the absurdity of negative interest rates. And he cut the overnight rate twice, the infamous surprise cut in January and the telegraphed cut in July, at a time when the Fed was flip-flopping about raising rates.

…click on the above link to read the rest of the article…

Canada’s job recovery will reflect growing divergence between resource and export sectors: Don Pittis

Canada’s job recovery will reflect growing divergence between resource and export sectors: Don Pittis

Bank of Canada governor Stephen Poloz says rebuilding Canadian economy might be a 5-year healing process 

Bank of Canada governor Stephen Poloz says the country is on track for slow job growth.  But  also expect a growing divergence between a weakening resource sector and a slowly recovering export economy.

Bank of Canada governor Stephen Poloz says the country is on track for slow job growth. But also expect a growing divergence between a weakening resource sector and a slowly recovering export economy. (Todd Korol/Reuters)

“The chart between oil and the Canadian dollar looks like a pair of train tracks,” said Bank of Canada governor Stephen Poloz in Ottawa Thursday.

As Poloz was speaking, fears of a meltdown in China, one of the world’s biggest resource consumers, was sending Canada’s commodities-heavy stock index to a bear market close.

The governor’s folksy description of oil and loonie plunging in perfect parallel was in sharp contrast to what he sees as the result of that plunge: a sharp divergence, not just between the U.S. and Canadian economies but between Canada’s shrinking oil and resources sector and a recovery in other parts of the economy.

That double divergence is expected to show up in the jobs market — and the recovery won’t be quick.

Despite the new gloom that accompanied the global market tumble, Poloz said, there is already evidence of what he called a “solid U.S. economic expansion.” This week, an independent payroll survey showed the private sector created 257,000 jobs in December, the most in 12 months.

Growing gap

U.S. economists are forecasting that Friday’s job numbers will show 200,000 new jobs created in December and are predicting unemployment will stay at a low five per cent — whereas Canada’s unemployment rate lingers around seven per cent.

…click on the above link to read the rest of the article…

Stephen Poloz discusses impact of opposing U.S., Canadian monetary policies

Stephen Poloz discusses impact of opposing U.S., Canadian monetary policies

Central bank will ‘continue to run an independent monetary policy, anchored by our inflation target of 2%’

Stephen Poloz cut the Bank of Canada's benchmark interest rate twice last year.

Stephen Poloz cut the Bank of Canada’s benchmark interest rate twice last year.

The Bank of Canada sent a strong signal today that it is content to allow the weak Canadian dollar to stay low.

Bank governor Stephen Poloz says he won’t try to match recent interest rate increases in the U.S., but will “continue to run an independent monetary policy, anchored by our inflation target of two per cent.”

Canada twice cut its benchmark interest rate in 2015 in an attempt to stimulate the economy. The U.S., meanwhile, finally hiked its rate in December after six years at record lows.

Normally, the two countries have monetary policies that move in broadly similar directions. But the U.S. hiking of rate as Canada cuts them — a phenomenon known as “divergence” — could have unexpected consequences, especially for the loonie which lost 16 per cent of its value last year while the two central banks were moving in opposite direction.

In a speech at Ottawa City Hall, Poloz explained that the weak loonie is the result of weak prices for Canada’s commodities, particularly oil.

“It is not a coincidence that the Canadian dollar is about where it was back in 2003 and 2004,” Poloz said. “Oil prices are also about where they were back then.

“The depreciation of our currency is a natural part of the process.”

Following the speech, he bristled at the suggestion during a media Q&A that he was “cheerleading” the loonie’s decline.

“It’s not something to cheer for,” he said. “We would of course prefer oil prices to be a little higher.”

…click on the above link to read the rest of the article…

Bank of Canada says housing, debt threaten financial system

Bank of Canada says housing, debt threaten financial system

Central bank releases financial system review that focuses on small group of highly indebted people

Bank of Canada governor Stephen Poloz told a news conference on Tuesday that the bank is watching a small group of Canadian households that are highly indebted.

Bank of Canada governor Stephen Poloz told a news conference on Tuesday that the bank is watching a small group of Canadian households that are highly indebted. (CBC)

Household indebtedness and imbalance in the housing sector are key vulnerabilities to Canada’s financial sector, the Bank of Canada says in a financial system review.

Specifically, the central bank is worried about young people who have taken on high levels of debt so they can buy homes in expensive markets.

The number of households with debt-to-income ratios of 350 per cent and above — considered highly indebted households  —  has doubled in the past 10 years to eight per cent of the population, the bank said.

About 80 to 87 per cent of the debt is from mortgages, it said. Many of these overburdened homeowners are in markets in Ontario, British Columbia and Alberta where house prices have escalated.

“Income growth hasn’t kept pace with the growth of borrowing, as house prices have continued to rise in these markets,” Bank of Canada governor Stephen Poloz said in a news conference in Ottawa.

A handful in trouble

“There is a not only more of these households, but they also carry a larger portion of household debt.”

He estimated there are about 720,000 such highly indebted households in Canada, and they are a concern because they are concentrated in pockets.

Debt and housing are the same problems flagged in last financial system review six months ago, but the vulnerabilities are “edging higher,” Poloz said.

The risk to these households is an economic downturn that could result in widespread job loss, the bank said.

“Household vulnerabilities could be exacerbated by a severe recession that is accompanied by a widespread and prolonged rise in unemployment,” the central bank said in a news release.

…click on the above link to read the rest of the article…

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