Transcription
journalist. After Governor McLeam's opening remarks, he and senior deputy governor Carolyn Rogers will be pleased to take questions until about 11:15. Over to you, Governor.
>> Thank you, Rebecca, and good morning. I'm very pleased to be here with the senior deputy governor to discuss our monetary policy decision. Today, the governing council maintained the policy rate at 2 and a quarter percent. We have three main messages.
First, steep US tariffs on steel, aluminum, automobiles, and lumber have hit those sectors hard. And uncertainty about US trade policy is weighing on business investment more broadly. But so far, the economy is proving resilient overall.
Second, inflationary pressures continue to be contained despite added costs related to the reconfiguration of trade. Total CPI inflation has been close to the 2% target for more than a year now and we expect it to remain near the target.
And third, in the current situation, governing council sees the policy rate at about the right level to keep inflation close to the 2% target while helping the economy through this period of structural adjustment. Nevertheless, [clears throat] uncertainty remains high and the range of possible outcomes is wider than usual. If the outlook changes, we are prepared to respond.
Premier Danumo sector. Resilient [snorts] commerce. foreign situ. director economy period. perspective.
So, let me expand on [clears throat] how we're interpreting new information, the new information we received since we published our October monetary policy report. In November, Statistics Canada published broad revisions to Canada's economic growth numbers for 2022, 23, and 24. The revisions suggest the Canadian economy was healthier than we previously thought before we were hit by the US trade conflict. In particular, they suggest both demand and economic capacity were higher coming into this year. This may explain some of the resilience we're seeing in more recent data.
After falling 1.8% in the second quarter due to sharply lower exports, Canadian GDP grew 2.6% in the third quarter. This was much stronger than we expected but largely reflected volatility in trade. Final domestic demand was flat in the quarter. We expect growth in final domestic demand to resume but with an anticipated decline in net exports, GDP growth is likely to be weak in the fourth quarter before picking up in 2026.
The labor market is showing some signs of improvement. After declining through the summer, employment has posted solid gains for the past three months and the unemployment rate has declined to 6.5% in November. Since the start of the year, there have been significant job losses in trade sensitive sectors. But in recent months, employment in these sectors has been more stable. So gains in other sectors, particularly services, have boosted overall employment. Looking ahead, however, we're seeing muted hiring intentions across the economy.
Inflation has evolved largely as expected. CPI inflation was 2.2% in October and measures of core inflation remain in the range of 2 and a half to 3%. In the months ahead, we will see some choppiness in headline inflation reflecting the temporary GST HST holiday a year ago. This is likely to push inflation temporarily higher in the near term. Seeing through this choppiness, we expect ongoing economic slack to roughly offset cost pressures associated with the reconfiguration of trade, keeping CPI inflation close to the 2% target.
The recent federal budget includes increases in government spending particularly in defense and measures to increase public and private sector investment. It will take some time for the impact of these measures to be fully realized and we expect they will contribute to growth in both demand and supply in the economy. As usual, we will incorporate updated fiscal measures from federal and provincial budgets in our next economic projection in January.
Taking all these developments into consideration, Governing Council assessed the stance of monetary policy. After cutting the policy rate in September and October, Governing Council had indicated that if inflation and economic activity were to evolve broadly in line with the October projection, the policy rate would be about right. While information since the last decision has affected the near-term dynamics of GDP growth, it has not changed our view that GDP will expand at a moderate pace in 2026 and inflation will remain close to target. Governing council therefore decided to hold the policy rate unchanged. We agreed that a policy rate at the lower end of the neutral range was appropriate to provide some support for the economy as it works through the structural transition while keeping inflationary pressures well controlled.
Finally, governing council acknowledged that uncertainty remains elevated. This includes the unpredictability of US trade policy and in particular the upcoming review of the Canada US Mexico agreement is creating uncertainty for many businesses. There's also uncertainty about how the Canadian economy will adjust to higher US tariffs. The volatility we're seeing in trade and quarterly GDP make it more difficult to assess the underlying momentum in the economy.
Foreom revenue. economy.
We will be assessing incoming data relative to our outlook. If a new shock or an accumulation of evidence materially changed the outlook, we are prepared to respond. Increased trade friction with the United States means our economy works less efficiently with higher costs and less income. This is more than a cyclical downturn. It's a structural transition. Monetary policy cannot restore lost supply, but it can help the economy adjust as long as inflation is well controlled. The Bank of Canada is focused on ensuring Canadians continue to have confidence in price stability through this period of global upheaval. And with that, we'll be very pleased to take your questions.
>> Thank you, Governor. We'll start with questions here in the room and then go to reporters who are joining us remotely. As usual, please limit yourself to one question so that we can get to every media outlet. Before asking your question, kindly state your name and affiliation. We'll start with Mark.
>> Thank you for taking the question. Mark with Globe Mail. Um wondering about the labor market. We've had three strong reports in a row. uh you seem to be downplaying that a little bit talking about weak hiring intentions, trade sensitive sectors being hit and so I'm just wondering how we should be thinking about how you are thinking about those three strong reports in the state of the labor market right now.
>> Well, look, first Mark, uh I mean we're we're pleased to see the improvement in the labor market. Um as you said, we've had you know three three reports with uh important job gains. Since the unemployment rate has come down to 6.5% uh in November, you know, it it's ticked down uh through the last 3 months. Uh pretty big move uh in November. Uh so look, that is encouraging. And I mean, if if you look at what's going on in the labor market, we saw some big job losses in the summer. Those were concentrated in in sectors sensitive to trade. Through the fall, employment in those sectors has been relatively stable. It's it's you know it's still weak but it it hasn't weakened further. And at the same time we've seen some uh we've seen some hiring particularly in services things like health care, personal care, uh recreation uh and you know that's that's flowed through to the bottom line. So you're seeing overall employment uh has moved up. So you know that is encouraging. Uh there there is some resilience to the economy. Uh you know what I would say though is you know looking forward it it hasn't fundamentally changed our view. Uh the Canadian economy is going through a difficult structural adjustment. Uh that is going to take some time. You know when you talk to companies uh they're they're being very cautious about their investment plans. They're they're cautious about their hiring plans. So yes, you know, we are pleased to see this resilience. Uh but you know, going forward, we continue to expect uh fairly modest growth.
>> We'll go next to Promet.
>> Hi Promeit from Reuters. Uh Governor, uh taking it further, I mean what is the source of this resilience in the economy? I mean considering that we have tariffs and we have uncertainty about USMCA, why is this resilience coming from? Where is the residence coming from?
>> Um, look, it's a good question and and it's, you know, it's going to be hard to give you a super precise answer, but I think there's a few things I would point to. [clears throat] First of all, as I mentioned in the opening statement, uh, there were broad-based revisions to the national accounts uh, covering the last three years, 22, 23, 24. And you know what you saw there is that, you know, demand was stronger, consumption, you know, consumer spending was stronger. Um but the other thing you saw is that is that business investment was stronger and productivity growth while still weak uh you know went from zero to about 0.5. So uh you know both demand and supply uh were stronger. So as we came into this year economy uh was was healthier than was previously reported and that may be uh explaining some of the resilience we're seeing uh in the more recent data. You know, the thing the second thing I would point to is that we have very steep tariffs on some key sectors in our economy. Steel, aluminum, autos, uh, lumber, but you know, for the rest of the economy, it continues to operate uh, you know, largely tariff-free with the United States. uh if you're compliant with KUSMA outside of those sectors uh you're you know you're still operating under the Canada US Mexico trade agreement. So I mean Canada's actually you know as as significant as these tariffs are Canada's average the the average tariff rate on Canada for the United States is one of the lowest in the world about 6%. So, and and what you're seeing is, you know, those sectors have been hit hard, but we haven't seen big spillovers to the rest of the economy. We're seeing some, you know, so overall the rest of the economy uh is is showing some resilience.
>> Uh we'll go next to Kevin. [snorts]
>> Uh good morning, Kevin Carmichael from the logic. Uh governor, you've had some time to sit with the federal budget now. To what extent do you think that's going to provide an offset to uh the tariff headwinds and everything else that's happening with global trade?
>> Uh well, you know, as you know, I I don't have an updated forecast for you. Um but you're right, we [clears throat] certainly have been looking at the federal budget. We will take those measures along with there's also been some provincial budgets and and uh we'll build those into our revised outlook in uh that we published in January. Um, you know what what you see in in the budget is um there's some increases in government spending particularly on defense um that you know they will that'll that'll support demand. Uh there are a number of targeted measures uh actually a lot of those were announced before the budget but uh they're in the budget um to support those hardhit sectors I just mentioned. um you know some of those and and a lot of those are to try to help those sectors pivot uh to to you know domestic sources of demand or uh to pivot to exporting to uh other countries other than the United States. And then the other important element of the budget is there's a lot of focus on investment both public investment uh big infrastructure projects uh and uh stimulating private investment. Um, you know I would I would say two things about the the budget. Um, you know we're still we're still working through the macroeconomic implications but I'd say two things. One is it's it's going to take some time for the impact of those measures to be realized. I mean, first of all, it takes time to actually get the money out the door to get those projects going, and then it's going to take time for those to show up uh in the economy. Um, and that that'll build up over time. Uh, but it's it's not like there's a big hit right away. Uh the you know the second thing is um you know the impact's going to depend importantly on the speed the speed and the effectiveness of the execution and uh importantly uh particularly on investment. It's going to depend on the uptake from the private sector. Um so I mean those things you know we're going to have to come up with some some forecasts of of those things. Um the and then the final thing I'll say is that you know the there's the budget is going to add to both demand and supply. We'll have to work out the relative balance there. Uh but you know to the extent that it's adding capacity as well as demand um it it's not adding a lot of additional inflationary pressures.
>> We'll go next to Paul. Governor, do you think traders are getting ahead of themselves in pricing in rate hikes in the second half of next year?
>> Uh Paul, I'm going to let you know traders decide um [clears throat] you know what what trades they want to make. Um, you know, what can I what can I say? Um, you know, I think we've been pretty clear that we think the policy rate, uh, you know, given how we see things right now, we think the policy rate is about right, uh, in the sense that we think it it's about right to keep inflation close to 2%. And you know, given that we're at the lower end of our neutral range, providing a little bit of support to the economy to help it uh work through this uh this uh this structural adjustment. That's how we see things now. Uh, you know, how you know how we see things going forward. Well, that's a more difficult question, and I'm not going to put the I'm not going to put our our uh policy on a on a on a timeline. Um, you know, I I think what what markets can count on is, you know, we're going to take our decisions one at a time based on the best available information and uh, you know, as our views evolve, we will we will update Canadians, we'll update markets. Um, the other thing, you know, I I would point markets to is we're going to be assessing incoming data relative to our outlook. And
>> [clears throat]
>> um, we'll be doing that in a symmetric way. If our outlook changes materially in either direction, either because there's a a a big shock or because there's an accumulation of evidence one way or the other, we're prepared to respond. We'll go next to Jordan.
>> Good morning. Um, how concerned are you about the reliability of GDP coming out of Canada given the revisions to GDP in recent years? And you spoke about the volatility in quarterly data as well moving forward. So, what ramifications does that have for monetary policy decisions if you're not getting a full picture of growth until after the fact?
>> Um, well, you know, I would underline Stats Can. Statistics Canada has a very tough job uh and you know anytime you've got a lot of volatility in the data um that job gets harder. The you know it has been compounded by the fact that you know you you wouldn't think that the US shutdown would really affect Canadian data but in fact it does because uh there are there are a number of bits of data that actually Statistics Canada gets from the US. The most important one being our exports to the United States are you know collected at the US. The data for that's collected when they get imported in the United States. Similarly, we send uh our you know the US imports into Canada [clears throat] into the US. So with the shutdown um the the data on exports is not as good as normal. Statistics Canada does have some other uh indicators. So they you know they've they've made their best estimate but yes it does you know in the fullness of time when when um US data comes in uh yes there is a prospect of of uh some larger than normal revisions. Um, so yes that that does you know you you do need to you do need to you know look at all the indicators and try to sort of look through and and see you know what where's [clears throat] the underlying momentum and you know revisions could make that a little more complicated. Um, but um fortunately uh you know the the US shutdown is over that will pass. We will work our way through it. We'll go next to Annie.
>> Hi, thank you for taking our questions. The bank often talks about inflation returning to target, but a lot of Canadians who are listening to this don't care as much about inflation rates. They care about costs. So, how does your current policy rate um take into the fact that prices remain historically high and and wages aren't keeping pace? And what do you say to Canadians who are struggling with affordability this Christmas?
>> Well, it's a very good question and I think we might we might take this one together because it is such an important question and uh you know we're we're hearing the same thing from Canadians that you're hearing. Um I I'd say a couple things. Um first of all, inflation has been around 2% for more than a year now. Um but you know, as you indicated as we came out of COVID, inflation was much higher. Prices went up. uh and um inflation's come back down but prices have not. Uh so yes uh you know many Canadians are feeling squeezed by the pro by the cost of living. What I would underline is two things. One is uh it it underscores the importance of keeping inflation low uh so that incomes can catch up. The other thing I would stress is that uh you know we're not going to lower prices overall. That's not how uh you if we were to try to push the whole price level down that would cause a severe recession in Canada. Nobody wants that. So we're not going to become you know things are not going to become affordable by lowering prices overall. The other element we need to keep inflation low. The other element to improving affordability is to grow income. Uh and you know how do we grow income? Well, you know, we need to improve our productivity. We need to invest more. We need to diversify our trade. That's what's going to grow income. Um with more income, uh then everything becomes more affordable. Um, but do you want do you want to say a few words about so what what we're hearing from Canadians and uh you know some of the discussions we've had?
>> Yeah, I mean we uh we have significantly stepped up our outreach to Canadians in the last two years. Um and we're hearing the same thing that you described. I mean the CPI the 2% CPI measures the rate of growth of prices. it doesn't measure the level change in prices that has happened as a result of CPI being higher than our target in in the past. Um, and Canadians are still feeling that. The other thing they're feeling is that where where prices are are still under a bit of pressure is food and shelter, things that you really can't avoid. Um, so those things those things loom large for Canadians. We understand that. We don't target, as the governor said, we we don't target any one price. We target the overall rate of change in prices. Um that um that doesn't change that level shift feeling that Canadians are are dealing with still. But as as the governor said, what we don't want um although it sounds good, the idea of prices coming down, that happens when the economy um is struggling. So what we need to do is keep inflation um at target and and support the structural shift that the economy is going through as the economy grows. Um, it will support wage increases and that will help over time fix that sense of affordability being being tough for Canadians.
>> We'll go next to Najute.
>> Hi Governor. Um I know you don't have a new forecast for the economy but given the recent data uh and as you say showing that the economy potentially more resilient right now um do you think that do you think that uh there's less slack in the economy than you forecasted in the October NPR and relatedly um do you see the output gap narrowing over your projection horizon because um you you continue to have an output gap through till 2027.
>> Uh okay. Well, as you started, uh we don't have a a new projection and we don't have a new estimate of the output gap to go with that projection, but but let me say a few things. Uh I mean, look, the bottom line is, you know, the recent data uh as as we've discussed is showing some improvement, and that is welcome news. But it has not changed our view that the economy is still in excess supply and we continue to expect modest growth uh going forward. So um you know what [clears throat] what what are the you know what what are some of the data that you would look at uh as you assess the balance between demand and supply? Well, as as has come up already, um, Statistics Canada published um new uh pretty broad revisions to to the national accounts and they showed for and that was for the last three years. They showed uh GDP quite a bit higher and if you look at why GDP was higher, it's it's both demand particularly consumption was a lot stronger, but there are also important supply elements. Investment uh productivity was also higher. So I would not interpret the higher GDP as simply an indication of more demand. I think there's there's both demand and supply uh elements to that. They're both stronger. Uh and we'll have to be look we we will you know we'll we'll have before we get to January, we'll have to make some assessment there of the the overall balance. The second thing I think people are looking at is the third quarter. Uh it came in much stronger than we expected. We were monitoring 0.5. It came in at 2.6. Um and so you know just sort of mechanically uh that that means the output gap is smaller. Again though I would I would underline that if you look at the details of uh Q3 it doesn't look like uh an indicator that demand in the economy was a lot stronger. I mean Q3 was strong largely because imports were really weak. Uh final domestic demand was actually flat. Um, and you know, looking ahead to the fourth quarter, we actually think final domestic demand will pick up a bit, but we expect to see a further swing in trade. So, we're expecting Q4 to be weak. So, you put it all together, uh, look, you I think you put it all together, the resilience we're seeing in the Canadian economy is welcome news, but it it hasn't really changed our view. We still think the economy is in excess supply. We still think growth will be modest because the economy is working through a structural transition. That's going to take time. And so, you know, we we still see that slack being taken up pretty slowly.
>> We have a couple more questions in the room before we go to the phone. So, we'll go next to Greg.
>> Good morning. Uh, I want to return to Prit's question about, you know, tariffs and the influence on on your policy. I mean I think of of three elements you know firstly investors thought we were almost guaranteed to have a recession that appears that it hasn't happened. Uh the secondly now is the idea that central bankers sometimes like to keep their powder dry in case there's another shock that could be related to trade. Wonder if that's in your thinking. And and thirdly, you've also said that fiscal policy or government policies are better than monetary policy at at helping affected industries, which could suggest that if if Trump breaks another trade deal with Canada, you know, the the pecking order is is maybe set more on the government side. So can you elaborate on how these tariffs, shocks, and threats have gotten you to this point and what more importantly like how it might influence you next year?
>> Yeah, [clears throat] I don't know where to start on that one. Greg, you packed so much you packed so much into that question. Uh, you know, look, I let me sort of just try to sort of review, I would say, what, you know, our thinking and and how it's evolved. I mean, I think, you know, the first message is that, yeah, it's been a difficult year for Canadians and Canadian businesses. Um but you know the it's looking the as the year's closing it's it's looking a little better than it looked in the spring and the summer. Uh you know sort of walk you through that. You'll you remember the spring in particular uh President Trump uh threatened then imposed then retracted then reimposed tariffs. Um, you know, as I [clears throat] as I have already spoken to, you know, fortunately, um, the average tariff rate that Canada faces with the United States is is among the lowest in the world. Uh, we've got some sectors that are be hitting hit really hard, but outside of those sectors, um, you can still trade largely tariff-free with the United States. And yes, you know, the you know, through that spring and summer uh period, yeah, the rword people were talking about uh was recession. And you know, we published scenarios uh where with with you know, there were certainly scenarios for US tariffs that could have uh pushed the Canadian economy into recession. uh you you know since then uh I would say you know now at the end of the year as we get to the end of the year you know the rword people are talking about is resilience we've seen some improvement in the data uh you know the last three employment reports posted solid gains Q3 the economy expanded uh so [clears throat] um you know we're we're certainly I think you ending the year in a better place than uh it looked in the middle of the year, but you know, we we've still there's still [clears throat] a significant adjustment to work through. Uh so, yeah, I would say, you know, that's how we're seeing it. You're you're right. You know, a number of things play into this. uh we're going to be assessing, you know, the impact of the budget in February. But, you know, that that's really the I think that's the sort of the best way I can lay out how things have evolved over the last year.
>> We'll go now to McKenzie.
>> Um, hi there. Both of you have uh previously said that when the TMX pipeline expansion came on that you estimated that it would give about a 2.5 0.25% increase to the Canadian economy. uh in your estimation, if there's a new oil pipeline built uh to export oil to Asia, would there be a similar increase to the economy? And governor, you just mentioned in uh your response to Annie that you think it would be wise to diversify the Canadian economy. So, do you think building a new oil pipeline to diversify oil sales to Asian markets would be a wise decision?
>> Um, well, look, I'm not going to comment on any specific plan and and I certainly don't have an estimate uh of of you know, the impact of that of of this plan uh on the uh the Canadian economy at this point. Um but you know, yes, we we do need to diversify our trade and I think the TMX uh pipeline expansion has been an important example. uh it has allowed us to [clears throat] increase uh our exports to the non to non- US and you know [clears throat] if you look at you know I don't have the exact numbers in front of me but you know it's gone from something like you know 98% to the US to 95% of the US so it's not a huge shift in the in our total exports but you know on the margin uh it's it's helping us get more oil to uh other countries and it's also So uh helping us get more value out of every balor we estimate because the spread between the Western Canada select and WTI has been narrowed by TMX. So yes it is a good example of of how these things can really make a difference. We do need to diversify our trade and part of that is uh better east west transportation, better port capacity uh to get our our products uh to the rest of the world and yes part of that is is pipeline capacity.
All right, we have a few reporters on the line with us. I just want to remind those on the call to mute your line if you're not asking a question so that everyone can hear the responses. Uh we'll go first to Mace News followed by Yahoo Finance and then Mortgage Logic News. So go ahead, Max.
>> Thank you, Rebecca. Um this is mainly for the governor. Not just uh Canada but other major economies are also going through a structured transition and some central banks are now discussing raising policy interest rates for different reasons. uh for example the Reserve Bank of Australia possibly in February as the inflation rate is above the uh target range and the Bank of Japan probably next week as part of the as part of the you know um normalization process citing reduced uncertainty over the US tariffs and negative rate still and so compared to those to those economies is Canada's exposure to the US trade policy still much more serious and you mentioned the average 6% tariff rate for Canada and are we still many months away from the need to even look at the possibility of adjusting the rates slightly higher?
>> Um, well I don't really have much to add on rates. I think I've been pretty clear. Uh you know we we think you know based on how we see things now we think uh policy rate is in the right place. um you know there's a lot of uncertainty uh that could change going forward and you know we'll we'll be updating you you know on on the the impact of tariffs um yes I would say one thing um you know in Canada so so most countries trade with the United States Japan European Union you know they trade with the United States what's different about Canada is that in Canada China and the United States, we built things together. Uh we have not had, you know, we've had free trade, open trade with the United States since 1989, 36 years ago. We've had open trade in in the auto industry from going back to 1965. Um and you know, the consequence of of US tariffs is it's disrupting that whole business model. So yes, it is having a big impact uh on our economy even though the average tariff rate is quite low. Um and it you know as I as I've underlined it it's not just a cyclical adjustment, it's a structural adjustment and that's going to take some time.
>> Uh go ahead John.
>> Hi there. Uh thanks for taking our questions. back in October 2024, you said Canadians could breathe a sigh of relief as inflation came down. Uh, and so we're a year and a half into a cutting cycle or at the end of one. Uh, but many Canadians are still worried about the economy, about their jobs, about their ability to buy a house or sell their house. With all the uncertainty you've highlighted through this year, what's your message to Canadians at the end of 2025 and going into 26?
>> Uh I we might take this one together, but you go ahead.
>> Um I mean it's a tough message. Uh as we said earlier to in response to a question, we know when we talk about inflation being back to 2% and how that's a good thing and that should help relieve some pressure for Canadians that that doesn't tell the whole story for them. They're still dealing with higher prices than a year ago or two years ago. um they're dealing with the constant um threat of an escalation in the trade war with our largest trading partner. Um and despite the fact that the economy has proven resilient, um there is a sort of an overwhelming feeling of uneasiness or uncertainty that that I think hangs over Canadians right now. So, so we're acutely aware of that. Um, the one thing that we will continue to focus on and continue to um uh to make to contribute to that picture for Canadians is to keep inflation um at at target. Um we we it's not going to bring prices down. We know that. We talked about that earlier. Um but it is a a source of stability that we can add to a very uncertain picture. Uh we'll go next to Robert.
>> Good morning. Uh you mentioned you'll be updating people as the bank's rate outlook changes. I'm wondering if we could drill down on that a little bit. And the reason I ask is because in the months leading up to the steep 2022 hikes, over half of Canadian mortgages were still taking variable rates and it caused a lot of unnecessary pain. And so I'm wondering like can you talk about whether it's the bank's policy to warn the public as soon as it believes there's a materially higher probability of rates going up versus staying the same or falling?
>> I mean our policy is to call it as we see it. Uh and as our you know we you know that's you know that's partly why we put out a an economic outlook. Uh this is you know this is the when we put out an outlook it's because you know that's that's our best assessment of where the economy is going. We know we need to be humble about that outlook. We know there's a lot of uncertainty. We know we know uh the situation could change. Uh but you know we put that out because you know that's monetary policy has to be forward-looking. we're putting that outlook is because that's the basis along with the risks that we're using to take our monetary policy decisions. And then the second thing is we're going to be assessing the uh data relative to that outlook. So I mean even before you hear from us uh if you can see the data that is coming in a lot stronger than the outlook you you know we've published you know you can be assured that we're asking ourselves boom you know we've noticed that data is coming in a lot stronger. Do we think that's going to be sustained? Uh is is it temporary? Is it is it more lasting? Uh is that materially changing our outlook? And as our as I said, as our views evolve, uh we will we will be we will be updating Canadians, you know, I'm not sure I Yeah.
>> The thing I'd add to that, Rob, and you know this well, you've written about it is Canadians choose their mortgage terms for a variety of reasons. The path of rates is one of those reasons. So, as the governor said, it's our job to be really clear about where we see the economy going and how that's affecting our decisions. At the end of the day, it's the job of mortgage brokers and other financial advisors to take that and other things into account as they advise clients about their mortgage terms and conditions.
>> All right. And our final question will be from the Canadian Press. Ian, go ahead.
>> Thanks for squeezing me in. Uh, just on you mentioned shelter cost still being elevated. Can you uh update kind of where you're seeing shelter costs going next year and how concerned you are about the uh kind of final wave of mortgage renewals?
>> Uh yeah, I mean it's it's tough to talk about Canada's housing market in um at a national level right now because there's a lot of regional differences. But I think generally we would say we see uh better balance in the housing market. Um sales to new listings looks pretty balanced. Uh prices have come off their highs at a national level. They've come off their highs and look to be stabilizing. Um overall activity looks to be better balanced right now. But again, that that national picture masks some um some some more imbalanced uh markets in sort of some regions and some housing types. So I think in general we don't expect another surge in house prices. Um we do expect maybe a continued correction in some of the the higher higher price markets. Um overall uh both interest rates and uh supply conditions um are helping to improve affordability on the margin, but we've got a ways to go. We've got a structural housing supply issue in Canada and really until we address that, I think there'll still be pressure on affordability uh particularly for first-time home buyers.
That concludes today's press conference. Thank you, Governor, Senior Deputy Governor, and all of you for joining us. Melanie,
>> thank you all. Happy holidays. Yeah, it's been quite a year. Enjoy the holidays and happy new year. Thanks.