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Originally Posted by calgarygeologist
That increase in mortgage interest drives up the inflation rate potentially making it more difficult for the Bank of Canada to combat inflation appropriately. In January, mortgage interest continued to be the #1 driver of inflation with a 27% growth rate. If the Bank of Canada is trying to hit 2% and one component of the calculation is going to be increasing at 20%, 30% or 40% that target could be out of reach.
That doesn't even touch on the issue that housing is the biggest part of a household budget and the upcoming increases could be brutal for household finances.
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I read today (sorry, can't find the article source now) that the BoC is likely to exclude mortgage interest (and its impact on overall inflation) as a factor in its future rate decisions. As you stated, mortgage interest will have an increasingly negative impact on overall inflation as over 2 million Canadians renew their mortgages at much higher rates in 2024/2025.