But he cautioned once again that Canadian households need to end their spending splurge, particularly on homes, now that their debt levels have reached 149 per cent of income, a higher figure than in the U.S. or Britain.
They were speaking specifically about the Euro-zone contagion and in less words he is basically predicting a collapse in Europe of some sort, not that this new or a surprise but to see the Bank of Canada being so direct about it is a surprise. I can only guess they see a storm building quickly and they don't want to be held accountable for being so complacent about the situation until recently.
The Bank of Canada has warned for months that Canadians have too much debt and that those with high debt will be in serious trouble going forward. I'm not sure what to make of this because the last I heard, interest rates in Canada were expected to be stable and low until at least late 2012 or even 2013 because of the economy.
Perhaps they're just worried that our overvalued real estate, combined with so many low-variable rate mortgages will bite a lot of people in the next few years once the rates inevitably rise.