Carolyn Rogers (NYSE:ROG), senior deputy governor at the Bank of Canada, cautioned about persistently high interest rates due to structural transformations in the global economy, escalating government debt, and geopolitical risks. Dhe emphasized that the world's ongoing adaptation process has little room for flexibility. She noted that Canadians have modified their spending and credit habits in response to these changes.
Rogers warned of the impact of structural changes such as the shift from saving to spending by baby boomers on Canadians' mortgage renewals. She underscored the need for gradual adjustments to avoid abrupt, destabilizing steps as part of inflation control.
She pointed out that higher government debt and geopolitical risks could escalate rates further. The Bank's rate hikes have limited the global financial system's flexibility, slowed the pace of credit growth, and increased businesses' debt-servicing costs. These effects, still permeating the economy, have led to reduced spending by Canadians. Rogers stressed on monitoring credit stress indicators as demand for goods and services slows.
Earlier this year on April 20, Rogers testified before the Senate of Canada Standing Committee in Ottawa. She advocated for a proactive and gradual adjustment to these rates after a 15-year period of lower rates to prevent destabilizing the financial system.
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