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“During the pandemic, for most credit products, the share of these borrowers missing payments reached historical lows. We’re now seeing a larger share of these borrowers lagging behind on credit card and auto loan payments,” he said. “This is concerning.” 

By contrast, Canadian mortgage holders experienced only a “modest” increase in financial stress, said the governor, as mortgage arrears have risen but remain below pre-pandemic levels. And, still, homeowners aren’t relying more on lines of credit or credit cards than before the pandemic, he added.

Renters have borne the brunt of the affordability crisis in Canada as rent continues to be among the biggest contributors to overall inflation. Many full-time minimum wage earners now spend half their income solely on rent — a significantly higher proportion than the standard affordability measure of 30 per cent.

Macklem emphasized that economic growth is not as strong as central bankers had expected, highlighting a weak labour market that has been particularly harsh on newcomers and youth, most of whom are also renters. 

“We would like to see hiring pick up,” he said, suggesting interest rates will continue to fall in the future. 

The timing and size of those rate cuts, however, depends on the economic data ahead of the Bank’s next meeting on Oct. 23. 

On Sept. 4, the Bank of Canada cut its key overnight lending rate for a third consecutive time to 4.25 per cent, citing concerns that the economy might be “too weak” and inflation might fall “too much,” and thus continuing to stimulate spending. 

He also left the door open to a larger half-percentage-point cut at the October meeting, a scenario that appears more likely now that inflation has hit the Bank’s two per cent target and the U.S. Federal Reserve having made a similar move last week. 

“It has been a long journey,” said Macklem, noting that he was pleased to see inflation hit the bank’s target last month. 

“Now we want to keep inflation close to the centre of the one per cent to three per cent inflation-control band,” he said. “We need to stick the landing.” 

Also part of the Bank’s mandate is to ensure a stable financial system and safe payments.

Starting Nov. 1, the Bank will require more than 3,000 service providers such as Apple Pay to register with them and follow regulations around retail payments. 

The governor explained that this oversight is a new mandate for the Bank of Canada, and that it wants to “make sure that the user funds are somewhere safe, if they’re deposited or invested in something,” he said.