Looking for a soft landing

Roughly a year after federal Finance Minister Jim Flaherty admonished the big banks for fueling record-high housing prices by cutting mortgage rates, his efforts to prevent a bubble situation are gathering speed, according to a Wall Street Journal report.

The fragile state of Canada's economy is a sign that the Bank of Canada is unable to safely raise interest rates. This, in turn, deprives policy makers of a device they can use to keep the market from overheating.

In response to this, the country's central bank used a mixture of stricter lending rules and numerous verbal warnings, which included a reprimanding of the banks in March 2013. Although widely considered as a highly unusual move as the time, it was done as an attempt to keep prices in check.

Although it is unclear whether or not those moves have been enough at this point, many experts lauded Mr. Flaherty's swift course of action for taking some of the froth out of the market.


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