Bank Of Canada Is Quietly Updating Forecast Models To Include Debt And Real Estate
Remember that time the head of Canada’s central bank said the housing bubble was good for the economy? Soak it up, because that may be the last time it ever happens. The Bank of Canada (BoC) finished its technical report on the Terms-of-Trade Economic Model (ToTEM). The model, which is used by the BoC as their primary forecasting tool, has now entered its third update in 15 years.
Buried amongst the document’s formulas is the focus of the update — debt and housing. For the first time ever, the central bank will include household burdens in the design and implementation of future monetary policy. Let’s take a 10,000 ft view of the drastic changes they have yet to reveal to the general public.
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