The heads of Canada’s biggest banks say rising interest rates are starting to have their intended effect of slowing demand but that they continue to notch growth.
Speaking at an investment conference in Toronto, RBC chief executive Dave McKay says mortgage markets are reacting to higher rates and credit card spending is also starting to slow.
He says, however, that both people and companies are still holding elevated amounts of cash, and other forms of liquidity, to provide a buffer as the economy nears the end of a cycle.
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CIBC chief executive Victor Dodig says he believes the Bank of Canada’s rate increases, including a three-quarters of a percentage point increase on Wednesday, are already affecting house prices and will have their intended effect on wage inflation and price stability.
BMO chief executive Darryl White adds that while he expects a slowing on the commercial loan side next year, for now there continues to be loan growth as companies pass on prices increases to consumers and demand remains high.
In raising its key interest rate target to 3.25 per cent, the Bank of Canada said it expects it will have to raise rates further given the outlook on inflation.