(Source: Financial Post)

The central bank said it expects growth in housing investment to remain brisk until early 2010, but then slow down as pent-up demand for real estate is met, affordability declines and the federal home-renovation tax credit expires.

However, in detailing the risks to its outlook, the bank suggested that domestic demand could be stronger than anticipated, as households “may” increase their spending on goods and real estate as a recovery takes hold. Some economists have expressed concern that by keeping rates too low, households would be tempted to take on more debt, which they have done at an increasing pace during the recession. The central bank is scheduled to provide more details about household debt in its biannual financial stability report later this year.

Read Paul Vieira’s full article “Bank of Canada raises growth forecast for end of year” in the Financial Post (October 22, 2009).

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