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Households unprepared for what comes next

We fear that households are utterly unprepared for the normalisation of market interest rates that began with the US Fed’s historic lift-off last week. Canada’s economy has long been overly reliant on household consumption and housing as drivers of economic growth. More worryingly, debt servicing obligations have risen close to a historically high share of household income, even as interest rates fell. Accordingly, even small increases in market rates could hit the economy hard.

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