Carney issues fresh debt warning

BoC Governor seeking new powers to curb borrowing.



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Bank of Canada Governor Mark Carney is actively seeking new ways to curb spiraling levels of household debt and is warning banks and borrowers alike against complacency amid historically low interest rates.

Carney told a Toronto audience on Monday that the debt loads of Canadians are rising faster than their incomes and that while low interest rates currently make borrowing appear cheap, the cost will eventually climb again.

Policy makers are studying pre-emptive ways to discourage consumers from taking on excessive debt loads, similar to the changes to mortgage lending rules ushered in earlier this year.

In normal circumstances a hike in interest rates would pour cold water on binge borrowing. However, conditions outside of Canada—specifically the anemic U.S. economy and struggling Eurozone—make such a move difficult as it would hamper Canadian competitiveness and discourage foreign investment.

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