Op-Eds
Published in The Hub.
The Canadian housing market is in turmoil. Supply has lagged far behind demand as the population surges. This imbalance has led to soaring property prices, high rents, and increased homelessness.
The situation calls for urgent action, and while long-term solutions, like building more homes, are essential, policymakers are also deploying short-term measures—most notably, vacant property taxes. As these policies are becoming increasingly popular, the potential impact and drawbacks of such taxes call for careful examination.
My new C.D. Howe Institute publication with Enrico Miglino aims to shed further light on this matter by using Vancouver’s empty homes tax as a case study. Implemented in 2017,…
Published in the Financial Post
Regulation is an important part of Canada’s financial landscape. But to ensure the rules support an efficient, effective financial regulatory framework regulators need to be “constant gardeners.”
Canada has 44 different federal and provincial financial regulators and, as our recent analysis for the C.D. Howe Institute shows, the word count of their various rules and mandates continues to rise significantly year over year. The rules’ predominant focus is on risk reduction and consumer protection. Much less attention is paid to market efficiency, innovation and growth — though in the big picture they are at least as important. Our research shows that the balance is almost five-to-one: 85 per…
Published in The Globe and Mail.
When headline inflation increased to 2.9 per cent in May, up from 2.7 per cent in April, there was much speculation that the Bank of Canada would pause its rate cuts. However, it ticked back down to 2.7 per cent in June. That, plus a weakening labour market and stagnating per capita GDP, made it practically certain the bank would cut on Wednesday. It did.
Whether the bank has entered an easing cycle is no longer the question. The only question left is how far and how fast the Bank of Canada continues to cut interest rates.
There are several upside risks to inflation in the near future which could cause the bank to pause its rate cuts. We think it shouldn’t. Here’s why.
The…
Published in the Financial Post
Media reports abound with speculation about how Bank of Canada interest rate cuts will lift the Canadian housing market. To be sure, you hear cautionary notes that the rate cuts that began with last week’s 25-basis-point cut will likely be slow. Less has been said, however, about how for many homeowners lower rates won’t actually reduce borrowing costs.
Variable-rate mortgages should see a full and immediate response to the rate cuts. But the 2024 CMHC Mortgage Consumer Survey shows only 23 per cent of mortgages are variable rate, five per cent are a fixed/variable combination and 69 per cent are fixed rate. The most common fixed-rate mortgages are for five years although three-year terms…
Published in the Financial Post
Canada’s financial regulator is in a ticklish situation. On March 6, United States Federal Reserve Chairman Jerome Powell signalled that U.S. regulators are reconsidering their plans to hike capital requirements for large banks in accordance with what is commonly referred to as the “international Basel III endgame agreement.”
The obvious question? Should Canada’s counterpart, the Office of the Superintendent of Financial Institutions (OFSI), follow suit? The obvious answer? In my view, yes, the OSFI should suspend its plans to implement similar changes for the six major Canadian banks until it is clear whether the U.S. and other major jurisdictions actually proceed.
The Basel…
