Ottawa’s shift could reshape how lenders and borrowers navigate the next shock
Bank of Canada senior deputy governor Carolyn Rogers signalled that the central bank has been rethinking how it frames inflation risks as its five‑year mandate comes up for renewal.
Speaking to the Brandon Chamber of Commerce in Manitoba, Rogers said the past half‑decade of disruption forced the Bank to revisit core assumptions.
“Canadians have faced a lot of economic upheaval over the past five years, and the next five may not be much calmer,” she said in prepared remarks.
Rogers said the Iran conflict and resulting oil price shock are already squeezing consumers and businesses, even as policymakers tried to judge whether higher energy costs would fade or feed a broader flare‑up in prices.
“What we need to guard against is that higher energy prices start to spread to other goods and services and become ongoing, persistent inflation,” she said.
From pandemic lessons to mortgage exposure
The senior deputy governor acknowledged that the Bank underestimated how stubborn post‑pandemic inflation would be after decades of low and stable price growth.
At the same time, she defended that “the 2% inflation target worked and remains the best framework for the future.”
Rogers said the Bank has been strengthening its toolkit, “improving our ability to detect and assess shocks that can lead to high inflation” and using more real‑time data and frequent business surveys to avoid waiting for lags in traditional reports.
She added that officials are reviewing the mix of inflation measures used to strip out volatile items, conceding this sometimes “led to confusion or even a sense that we were moving the goal posts.”
Housing affordability beyond the Bank’s mandate
Rogers said Canadians have been clear in recent consultations that “they value stability in both inflation and interest rates,” after a cycle of rapid tightening and rate pauses. However, she noted that monetary policy alone could not deliver cheaper homes.
“We’re looking at how monetary policy interacts with housing demand and supply,” she said.
“We can’t solve housing affordability—that’s an issue for governments at all levels to consider. But we could do more to explain how interest rates and housing market imbalances affect each other.”
She previously signalled that lower home prices are a necessary part of fixing Canada’s affordability crunch, even as wars, tariffs and trade tensions kept jostling the broader inflation outlook.
Rogers said the central bank is reassessing how much housing weakness it has built into its forecasts.
“We've all been worried about how fast house prices went up in recent years and now we're worried about how they're coming down. We do need them to settle down a bit for housing to get more affordable,” Rogers said.
Even with headline inflation back below target in February, Rogers said the central bank expects “a more variable inflation environment” as global trade tensions, stalled population growth and the rise of artificial intelligence reshape the economy.
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