Canada not alone in underperforming the United States, RBC's Dave McKay says
Higher interest rates are dragging down consumers in Canada, U.K. and Australia
The United States economy is powering ahead while the economies of Canada, the United Kingdom and Australia are slowing from softer consumer demand caused by higher interest rates, the head of Canada’s biggest bank said Tuesday.
tap here to see other videos from our team.
Canada not alone in underperforming the United States, RBC's Dave McKay says Back to video
tap here to see other videos from our team.
Royal Bank of Canada chief executive Dave McKay told a banking conference in New York on March 5 that U.S. consumer debt is not being repriced due to that country’s 30-year fixed mortgage terms, while consumers in Canada, Australia and the U.K. are being forced to renew at higher levels.
Subscribe now to read the latest news in your city and across Canada.
- Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman, Victoria Wells and others.
- Daily content from Financial Times, the world's leading global business publication.
- Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account.
- National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on.
- Daily puzzles, including the New York Times Crossword.
Subscribe now to read the latest news in your city and across Canada.
- Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman, Victoria Wells and others.
- Daily content from Financial Times, the world's leading global business publication.
- Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account.
- National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on.
- Daily puzzles, including the New York Times Crossword.
Create an account or sign in to continue with your reading experience.
- Access articles from across Canada with one account.
- Share your thoughts and join the conversation in the comments.
- Enjoy additional articles per month.
- Get email updates from your favourite authors.
Sign In or Create an Account
Canadian banks are repricing roughly 15 per cent of their “back book” of existing mortgage clients, he told the RBC Capital Markets Financial Institutions Conference, adding that those are fairly significant shocks that are pulling disposable income back from the consumer.
McKay had previously identified mortgage payment shock as the main culprit for Canada’s underperformance.
“It belies an underlying slowing of the Canadian economy, the U.K. economy and Australian economy largely because of the difference in how the consumer is behaving,” he said.
McKay said the current economic cycle has been a unique phenomena that has seen consumers struggling with debt while the employment rate remains high.
“So I think from that perspective, it’s unique and it’s helping us engineer a softer landing,” he added.
“The U.S. economy’s outperforming but inflation is coming down, so it’s working.”
• Email: dpaglinawan@postmedia.com
Bookmark our website and support our journalism: Don’t miss the business news you need to know — add financialpost.com to your bookmarks and sign up for our newsletters financialpost.com.
