Conduct of Monetary Policy under Housing Market Imbalances

Amina Enkhbold and Serdar Kabaca

No 2026-53, Staff Analytical Papers from Bank of Canada

Abstract: Canadian housing imbalances have elevated shelter inflation as a driver of CPI, fueled by high house prices, mortgage costs, rents, supply constraints, and leverage. This note uses a model with housing supply and extrapolative expectations to assess whether monetary policy should incorporate or look through shelter inflation under demand and supply shocks.

Keywords: Financial system; Household and business credit; Monetary policy; Monetary policy framework and transmission (search for similar items in EconPapers)
JEL-codes: E E5 E52 G G2 G21 R R2 R21 R3 R31 (search for similar items in EconPapers)
Date: 2026-10
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Persistent link: https://EconPapers.repec.org/RePEc:bca:bocsap:26-53

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