(Bloomberg) -- The Bank of Canada stepped up the pace of interest-rate cuts and signaled that the post-pandemic era of high inflation is over.Most Read from BloombergClimate Change Is Killing Buildings in Slow MotionHow Kyiv Became a Leader in Digital Services Amid Wartime StrainTransportation Polic...
While I like the idea of a lower interest rate, I also wonder what it will do. Will it drive housing prices up? Will it stimulate the economy by encouraging people to take debts and loans?
Did they lower rates to encourage people to take out loans?
This is what was meant by the inflation is transitory line, the timelines are just much longer and the effect is more painful than people expect.
I'm hoping this injects some serious stimulus into the housing construction industry to boost housing supply, but I would have liked to see the government offering direct low interest loans or even construction bonds with tight default rules or co-ownership stipulations.
Stimulus in way of rising housing prices where affordability becomes harder and harder to reach for the masses, yes it will. But we've seen this for the last 15 years. It ain't the interest rates that'll boost supply to solve our housing problem. It's the supply constraints - ie labour, red tape including building restrictions, nimby, air b&b etc that are holding things back.