However, the situation remains highly uncertain, and we have seen no signs of a similar moderation in the Toronto area. Again, we must emphasize that a moderating housing market, as we have seen in Calgary, for example, may ease financial stability concerns on one front, but leave the level of household debt at a very high level.
Governing Council’s discussions of these risks were also influenced by the backup in global bond yields since the US election. Canada’s bond yields have responded, as is typically the case, albeit in less than a one-for-one fashion. This has led to some increases in Canadian mortgage rates. We will monitor these developments carefully in the months ahead.