OECD Economic Outlook, Volume 2019 Issue 2 by OECD

Author:OECD
Language: eng
Format: epub
Tags: economics
Publisher: OECD Publishing
Published: 2019-11-21T00:00:00+00:00

Policy should support the economy

Notwithstanding slower growth and a deteriorating global economy, the Bank of Canada has kept the policy rate unchanged at 1.75% since late 2018. With projected continued weak growth, soft global trade and easing global financial conditions, the official rate is projected to be cut by the end of 2019 and once more in the first half of 2020, to 1.25%. Despite contractionary measures in Ontario’s 2020 budget and the Federal Budget for 2021, the overall general government fiscal stance is estimated to lend slight support to the economy, with the overall underlying primary surplus diminishing in the coming two years. The easing is appropriate given slower growth.

Housing activity has picked up, and house prices show signs of recovering on the back of robust population growth, a strong labour market and lower mortgage rates. This comes after the market stabilised from steep house price rises. Household indebtedness remains high by international standards, but households are expected to start deleveraging and household credit growth has slowed. As monetary policy is projected to ease, close attention needs to be paid to housing market developments. Macroprudential policy should be tightened again if needed. Furthermore, to make housing more affordable and shorten waiting lists for social housing, the supply of affordable housing should be increased and the stock of social housing should be better maintained and targeted.

Download

Copyright Disclaimer:
This site does not store any files on its server. We only index and link to content provided by other sites. Please contact the content providers to delete copyright contents if any and email us, we'll remove relevant links or contents immediately.