Bank of Canada might need to raise rates if companies keep raising prices.Question:Can this policy crash housing prices?

UrbanPoet wrote: ↑ https://www.cbc.ca/news/business/inflat ... -1.6750879

This guy says that if grocery stores keep rising prices, BOC will keep raising rates!

Someone has to blamed for inflation. The week link are the grocery stores.

Tiff has to use his month to bring down inflation because his hands are tied.

The act of fighting inflation is inflationary. Debt servicing is part of the basket of goods and services used to determine inflation. We are probably heading towards a bit of spiral soon. The things propping up real estate not seen in the previous housing cycles is the massive increase in replacement cost and immigration. Once this rate cycle subsides, we could see the housing market ripping again.

will888 wrote: ↑ The act of fighting inflation is inflationary. Debt servicing is part of the basket of goods and services used to determine inflation. We are probably heading towards a bit of spiral soon. The things propping up real estate not seen in the previous housing cycles is the massive increase in replacement cost and immigration. Once this rate cycle subsides, we could see the housing market ripping again.

The only part of the basket that's related to debt servicing is the mortgage interest component of Shelter. For 2021 the shelter weight was lower than 2020 due to the drop in interest rates. For 2022 there will be a sharp increase in the weight due to an increase interest payments which was not offset by a decline in house prices.
Another nuance to the weighting is the undercount of people renting due to the fact that temporary residents (800,000 international students) are not counted as part of the renter vs. home ownership equation. This means that a heavier weighting is given to servicing mortgage debt vs. paying monthly rent in the shelter costs.