BUSINESS

Soaring Canadian Household Debt A Key Weakness For Economy, BoC Says

02/24/2016 04:50 EST | Updated 02/24/2017 05:12 EST
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OTTAWA — The Bank of Canada is using a speech today to emphasize its concerns over rising household debt and its potential impact on the country's financial system.

In prepared remarks of his address, deputy governor Lawrence Schembri says growing household indebtedness largely caused by low interest rates remains a key weak spot for Canada's financial stability.

He says higher levels of consumer and mortgage debt have left the economy and Canadians more vulnerable to negative shocks — such as a severe recession that could drive up unemployment.

household debt canada

Schembri's remarks come as the economy struggles to recover from the steep slide in oil prices. 

He also spoke as the federal government appears poised to run budgetary deficits in order to invest billions of dollars in areas such as infrastructure as a way to boost Canada's weak growth.

Schembri also reaffirmed the central bank's view that measures such as fiscal stimulus from Ottawa are better suited at this point to help improve financial stability because the benchmark interest rate is already very low.