08:57 AM EDT, 06/06/2025 (MT Newswires) -- The Bank of Canada, in Rosenberg Research's view, made another policy misstep on Wednesday by staying on the

sidelines with its unchange rates.

The focus is mistakenly on the inflation file coming out of the tariff file, but one would think that the central bank would realize that with labor market slack accumulating, all we get is negative real wages coming out of this which will be followed by contracting consumer spending volumes, said Rosenberg Research.

Interest rates may seem low, but they are clearly still too high benchmarked against the pain Canada is seeing in the housing market -- the most credit-sensitive segment of the

economy, stated Rosenberg.

Home sales in the key Greater Toronto Area tumbled 13.3% year-over-year in May, while new listings soared by 14%. That combination has sent average home prices down 4% from year-ago levels.

So here we have deflation in this mammoth $4 trillion asset on household balance sheets, about 20% bigger than the entire economy, and Governor Tiff Macklem is consumed with inflation worry, pointed out Rosenberg.

The five-year mortgage rate, at just over 5%, is +26 basis points above the average of the past half-decade, and most of the renewals now and into next year will be repriced

from the sub-3 levels that prevailed through the 2020 to early 2022 period, recalled Rosenberg.

The net effective interest rate for the entire Canadian household sector today is 5.7%, and the average of the past five years was 4.75% -- so the BoC isn't really providing any real relief in the midst of this delinquency cycle the country is in until it cuts rates at least four more times, added Rosenberg.