James Alexander Michie: Warning regarding Canadian housing | CBC News

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Chair Jerome Powell James Alexander Michie

U.S. central bank chief issues warning on Canadian housing without even realizing it: Don Pittis

Author: James Alexander Michie

The head of the US central bank gives warnings about Canadian housing without looking at it. Likewise, the most powerful central banker in the world has established that US interest rates are rising, and if history is taken as a guide or guide, Canadian rates are also rising with them.

Now, Jerome Powell showed an optimistic position in terms of jobs, growth and likewise the benign effect of current commercial disputes, despite this, some of the comments given by the same could be transformed into some involuntary warning but ominous with respect to the Canadian real estate market. And, while the high costs of assets are still a risk, according to Powell, who in turn was optimistic about the questions of the financial press, stating that the US economy is in one of its best periods in modern history. Added to that, Powell gave some reassuring words to American consumers, but in turn, he dropped a grim warning to Canadians and likewise said “If you look at asset prices, it is true that assets are within reach. “What really hurts is if consumers are borrowing excessively and doing so … against an asset that can fall in value”, he also emphasized “That’s a matter really serious when you have a housing bubble and the highly leveraged consumers and the value of the home fall in. We know that this is a really bad situation. ”

For his part, both for Canadians and for people from other countries in the world affected by the increase in rates in the United States, Powell stressed and stated that his only concern is the domestic policy of EE. UU His message was effective: countries that have large loans denominated in US dollars will have to discover how to deal with them.

Despite this, it is necessary to highlight that the progressive nature of the US rates. UU It continues to grow and the transparency of what the Fed considers will help most international borrowers to plan for the future. In the same way, Powell established that it is the work of the US Treasury. UU., Not the central bank, administering the currency, a rising US dollar caused by the increase in rates would inevitably condescend to the countries to sell more to the US. In addition, Powell said that regional meetings of the Fed with business leaders across the country show that they are concerned about the potential impact of tariffs.

Take a read: https://www.cbc.ca/news/business/fed-interest-rates-1.4839094

Source: Don Pittis | CBC News 

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