Bank of Canada advises consumers to be responsible

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December 17, 2009

The Bank of Canada seems to be really concerned about people’s debts lately. During his speech at the National Forum of business leaders in Toronto yesterday, the bank’s governor Mark Carney warned Canadians again not to borrow more money than they will be able to afford when the low interest rates(0.25 percent) rise.

Carney admitted that the current stimulative monetary policy of the bank is actually partly meant to encourage people to take advantage of the low rates. However, he advises households and lenders to be responsible. Their acting is particularly important, the governor said. Consumers should ensure that they will be able to service their loans in the future, after the rates increase, too. Carney didn’t predict any specific date when the interest rates could start increasing, though.

After the public speech, Carney said to the media that he expects growth in the Canadian economy to pick up. According to him, the growth should come from consumption, housing and government in Canada. Interesting, really. But if the consumers spend their money paying down debt, where is the Bank of Canada going to find the growth?

It seems like the Bank of Canada intentions towards the consumers are good. It is trying to save them from possible trouble. But we mustn’t forget, it was the the bank who have lowered the rates in the first place to the point where people were tempted to buy property above their real means.