I know that the season's buying frenzy is just starting to abate and that your credit card statements may be giving you some heart palpitations. Are your holiday bills just a temporary fluctuation, or a sign that you are taking on more long term debt?
Are YOU one of the many Canadians whose debt load has increased by 7% or more? If so, the following article might ring some bells for you!
__________
In recent news, The Bank of Canada governor Mark Carney is becoming concerned that Canadians are taking on far too much debt, and that they believe the easy ride on debt payments will be permanent. "(But) cheap money is not a long-term growth strategy," he warned.
"Experience suggests that prolonged periods of unusually low rates can cloud assessments of financial risks, induce a search for yield and delay balance sheet adjustments." Bank of Canada governor Mark Carney is issuing a broad warning to Canadians, firms and governments that the financial and economic crisis is far from over and they need to rein in their appetite for cheap money.
Carney told the Economic Club in Toronto that the global recovery is so weak that advanced nations may need to keep interest rates super-low for a long period, and the U.S. may have to resort to yet another round of printing money.
"Experience suggests that prolonged periods of unusually low rates can cloud assessments of financial risks, induce a search for yield and delay balance sheet adjustments."
For Canadians, he noted with alarm that household credit has grown by seven per cent since the recession's trough, compared to a 3.5 per cent decline in the U.S., perhaps an indication that Canadians believe the easy ride on debt payments will be permanent.
When the reckoning comes, he warned, it could be swift and brutal. The Bank of Canada will set interest rates based on inflation, not on whether a large swath of Canadians have taken on too much debt, he added. In fact, he suggested the bank may tighten even in a low-inflation environment to discourage risky behaviour.
_________
As always, should you have any questions or concerns, please do not hesitate to contact me.
CALL US NOW: 604-736-1855
Use our 