Bank of Canada will consider how its policies affect housing affordability as part of its next five-year review of monetary policy framework.
Gov. Tiff Macklem said in a speech in Mexico City on Tuesday that the bank is preparing for a 2026 contract renewal to examine how to interact with many Canadians’ growing housing market and how monetary policy interacts.
“Monetary policy cannot directly increase the supply of housing, which is a problem for elected governments,” McClum said. “But with interest rates, monetary policy does directly affect housing demand. Housing is an important part of Canada’s consumer price index, so the cost of housing affects inflation.”
“So it’s worth looking at how monetary policy affects dynamics in the housing sector and how best to take housing affordability into account our focus on overall price stability,” he added.
Comments mark one of the clearest confirmations of the bank’s intention to have more explicit accounts in its framework discussion.
Macklem noted that the comment will also consider how best to measure core inflation in a world prone to supply shocks. However, he confirmed that the 2% inflation target since 1995 will not be reconsidered.
The bank’s monetary policy framework is reviewed every five years in cooperation with the federal government. The last review, completed in 2021, reaffirmed the 2% target and explored alternatives such as price-level targets and nominal GDP targets.
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Bank of Canada BOC speaks about housing affordability inflation targets monetary policy framework tiff macklem
Last modified: August 26, 2025
