BoC deputy flags productivity trap
Bank of Canada Deputy Governor Nicolas Vincent warned about a ‘vicious circle’ of low productivity that ties into broader economic challenges, a point he raised publicly on social channels argued. Economists are linking the productivity story to stubborn inflation and slower growth prospects.
Deputy Governor Nicolas Vincent delivered “Toward a virtuous circle for productivity” in Québec on Nov. 19, 2025, laying out policy levers to boost business investment and labour efficiency. (bankofcanada.ca) Vincent quantified the shortfall from weak productivity as roughly $5,000 per Canadian versus G7 peers over the past quarter-century, a gap he said stems largely from underinvestment by Canadian firms. (morningstar.com) The Bank’s January Monetary Policy Report judged that excess supply roughly offsets upward cost pressures and that inflation should remain near the 2% target absent new shocks, a backdrop that underpins the BoC’s cautious stance on easing. (bankofcanada.ca) Market polling and think‑tank surveys show near‑term policy inertia: a CD Howe panel found all 10 respondents recommending the overnight rate be held at 2.25% at the March decision, with most expecting that stance through much of 2026 and into next year. (cdhowe.org) Housing indicators point to cooling demand that intersects with the productivity story—national MLS® home sales fell 5.8% month‑over‑month in January 2026 and the sales‑to‑new‑listings ratio dropped to 45% from 51.3% at end‑2025. (creastats.crea.ca) Price and mortgage spreads are reflecting that environment: the national average sale price was $652,941 in January 2026 and benchmark prices were down for an eighth consecutive month to $658,300, while storefront and broker channels show 5‑year fixed offers ranging from about 3.64%–3.79% for promotional/high‑ratio deals and roughly 3.89% or higher at some posted bank channels. (wowa.ca) Lenders are responding with product actions and retail promos as the BoC’s rate path stays uncertain: major banks list current mortgage products and special offers (for example, RBC’s time‑limited mortgage value bundle), and brokers are marketing sub‑4% 5‑year campaigns while policy guidance points to a likely hold at the March 18 announcement. (rbcroyalbank.com)
