Canada’s consumer price index came in at 3.4 per cent in May, but some observers have pointed out that removing mortgages from the inflation picture would put the figure far closer to the central bank’s two per cent target.
“Yes, if you take mortgage interest out of the CPI, instead of 3.4 , you’re left with 2.5,” Macklem said. “On the other hand, if you take things out that are falling, what you’re left is what’s going up.” “We are heavily dependent on real estate,” he told BNNBloomberg.ca by phone. “It's an industry that has grown too big to fail and everyone has an interest in it.”
Caranci said the central bank is looking to slow down consumer spending, which it considers a major driver of inflation, as homeowners feel the pinch of higher mortgage payments.Experts have frequently pointed to inadequate supply as a major cause of Canada’s sky-high housing costs. The Bank of Canada’s statement on its rate decision pointed to a pickup in the housing market, and said “new construction and real estate listings are lagging demand, which is adding pressure to prices.”