By John Tilak
TORONTO Nov 7 Interest rates are going to go up
over the long term regardless of what central banks do at the
moment, Canadian Finance Minister Jim Flaherty said on Thursday
after the European Central Bank unexpectedly trimmed rates.
The bank cut rates to a record low earlier in the day and
said it would prime banks with liquidity into 2015 to prevent
the euro zone's recovery from stalling.
Flaherty told reporters in Toronto that people "should
anticipate over the long term, interest rates will go up
regardless of what central banks do now".
"The pressure on interest rates is clearly on the upside,"
he added. "The period we've had of very low interest rates is an
Flaherty and the Bank of Canada, which has kept interest
rates at a near-record low since September 2010, have repeatedly
told Canadians to be careful when taking on debt since borrowing
costs will eventually start to rise.
NO SIGNS OF HOUSING BUBBLE
Flaherty also said the government would intervene in the
Canadian housing market only in the event of bubble-like
indicators, something he did not see right now.
Canada's housing market, which avoided the crash seen in the
United States, boomed coming out of the recession after the
central bank cut its main interest rate to a record low.
But Canada's Conservative government, concerned about the
risk of a bubble and high levels of household debt, has
tightened mortgage lending rules four times since the financial
crisis in a bid to slow it down.
After the latest intervention, in July 2012, the property
market cooled markedly, but sales and prices bounced back
earlier this year.
Last week, Canada's federal housing agency reduced its
forecast for housing starts for 2014.
Flaherty said the government was closely watching the condo
markets in Montréal, Toronto, Vancouver and Calgary.
"We have to be careful that we don't get an artificial
increase in prices, a bubble, because of speculation."