Conduct of Monetary Policy under Housing Market Imbalances

Available as: PDF

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.

DOI: https://doi.org/10.34989/sap-2026-53