The reason for their frustration is Poloz's unwillingness to raise interest rates to slow
the accumulation of household debt, which now is about 170 per cent of disposable income.
The ongoing
accumulation of household debt has led to a further increase in the debt - servicing ratio; interest payments as a proportion of disposable income rose to 9.3 per cent in the September quarter (Graph 23), and are expected to rise further.
He says the higher rates have helped keep
the accumulation of household debt lower than it otherwise would have been had Canada continued with government belt - tightening approaches of the past.
Not exact matches
In reprimanding the financial sector, Flaherty again warned
of risky
household debt accumulation.
RBC economist Laura Cooper said in a note to clients that the most likely scenario is that as housing moderates, the pace
of household debt accumulation will also ease.
Even so, the rate
of debt accumulation — for government, corporations and
households — has materially slowed, suggesting that the worst
of deleveraging headwinds are behind us.
Over the past year, the strong pace
of debt accumulation has outstripped the growth in the
household sector's assets, despite further significant gains in housing wealth (Table 9).
RBC says the steady pace
of debt accumulation overall should give some comfort to the Bank
of Canada, which has called
household debt the No. 1 risk to the financial system and economy.
«However, the long - run negative effects
of debt eventually outweigh their short - term positive effects, with
household debt accumulation ultimately proving to be a drag on growth.»
Student
debt burdens are weighing on the economic fortunes
of younger Americans, as
households headed by young adults owing student
debt lag far behind their peers in terms
of wealth
accumulation, according to a new Pew Research Center analysis
of government data.