Mostly it is housing resales that have been soft, suggesting there may have been more froth in certain housing markets than previously thought. Housing markets that were not experiencing bidding wars appear to be adjusting in line with our expectations. However, more data will help us better understand the full situation in Canada’s housing market.
The Bayesian approach provides a useful benchmark for policy in an environment of well-defined sources of uncertainty about the structure of the economy, and the resulting policy prescriptions give relatively greater weight to outcomes that have a higher probability of being realized.