Now, let’s look at high household debt, a key vulnerability we analyzed in the December issue of the FSR. 6 Key vulnerability: household indebtedness Canada was spared some of the most serious negative consequences of the global financial crisis because of our strong financial regulatory and supervisory framework and the effectiveness of our policy response.
This response included a reduction in the policy interest rate by the Bank of Canada to support aggregate demand and help achieve our inflation target. 7 As a result of these policies, the Canadian economy recovered relatively quickly, supported by solid growth in household spending that was funded by household income growth and borrowing.