Pattie Lovett-Reid

Chief Financial Commentator, CTV

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The Bank of Canada, as widely expected, is standing pat on interest rates. But what does that mean for you?

For now, lower rates will support housing market. However, in addtion to lower rates, the housing market is also being supported by the job market. With over 300,000 jobs created in the last year, if you feel good about your job, and have a good paycheque, you are more likely to consider getting into the market. You also are more likely to go out spend – and there’s little doubt the consumer has been helping to prop up the economy.

But will it continue?

Bank of Canada Governor Stephen Poloz acknowledged Wednesday the resiliency of the Canadian economy will be challenged. He said if global economic performance weakens further and trade conflicts ramp and up, then job creation could be tested. If in fact the U.S. flirts with a recession in the months ahead, there will be a knock-on affect here in Canada.

So the central bank raising interest rates may not be the day of reckoning for indebted Canadians; it could be their job loss, a reduction in average hourly wages, or the lack of a bonus that some have come to count on.

My rallying call to action is to take charge now. The economy isn’t as rosy as it may appear, and household vulnerabilities are real. Time to break down your income statement line-by-line and cut back on expenses where you can, and redirect any savings toward your debt.  

Financial stress is real, household financial debt is real, and the wildcards that could have a negative impact on the economy are real.

The problem is, we often don’t address these issues until they hit our household. And for some, it will be too late to right the ship.