Don’t look to the BoC to solve Canada’s housing and economic woes, Macklem says

MONTREAL — Bank of Canada governor Tiff Macklem is laying out the limits of monetary policy as he warns the central bank can’t solve problems like housing affordability with interest rates.

According to prepared remarks Macklem is delivering in Montreal today, he says history shows monetary policy is quite effective at controlling inflation in the medium term.

But the governor says it also has limitations, including an inability to address short-term price fluctuations.

Macklem says interest rates also can’t fuel economic growth in the long run, noting that can only be accomplished through population growth or productivity improvement.