{"id":699866,"date":"2026-05-28T18:36:17","date_gmt":"2026-05-28T18:36:17","guid":{"rendered":"https:\/\/www.newsbeep.com\/ca\/699866\/"},"modified":"2026-05-28T18:36:17","modified_gmt":"2026-05-28T18:36:17","slug":"bank-of-canada-says-households-struggling-economy-vulnerable-to-shocks","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/ca\/699866\/","title":{"rendered":"Bank of Canada says households struggling, economy vulnerable to shocks"},"content":{"rendered":"

The Bank of Canada<\/a> says the economy is navigating a \u201cvolatile\u201d global environment and that\u00a0 \u201cvulnerabilities\u201d exist that could expose Canada to potential shocks on multiple fronts.<\/p>\n

\"\"<\/p>\n

The central bank released its annual Financial Stability Report on Thursday, which gauges the resilience of the Canadian financial system and highlights key risks that could undermine that resilience. It was penned by Senior Deputy Governor Carolyn Rogers, along with Deputy Governor Toni Gravelle.<\/p>\n

\u201cCanada\u2019s financial system has functioned well through a challenging year,\u201d Rogers said in the report.<\/p>\n

\u201cHowever, vulnerabilities have increased in some parts of the system.<\/p>\n

\u201cThe economic and geopolitical environment has become more volatile. And this has made it more likely that a new shock or a combination of shocks could cause several vulnerabilities to crystalize at once. If this were to happen, these vulnerabilities could interact and reinforce each other.\u201d<\/p>\n

Story continues below advertisement<\/p>\n

This means that Canada\u2019s economy could be exposed to damage if some of these risks escalate and become much more serious.<\/p>\n

\t\t\t\t\t\t\"Click<\/p>\n

\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t1:54
\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\tTrump says \u2018serious negotiations\u2019 happening with Iran to end war\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<\/p>\n

Among the main risks outlined in the report is global uncertainty stemming from the war in the Middle East.<\/p>\n

The conflict, which began in February when the U.S. and Israel launched joint attacks on Iran<\/a>, has jeopardized the world\u2019s supply of oil, natural gas, fertilizer and other products.<\/p>\n

The Iran war, the bank says, \u201chas added to global uncertainty, leading to volatility in some markets.\u201d<\/p>\n

Last year\u2019s report was heavily focused on risks stemming from the trade war and U.S. tariffs<\/a>, and Rogers says those risks remain as Canada and the U.S. intensify talks towards the review of CUSMA.<\/p>\n

Story continues below advertisement<\/p>\n

\u201cThe impacts [of the trade war] have been less widespread than we originally feared. But this risk has not gone away, and the future of Canada\u2019s trade relationship with the United States remains uncertain.\u201d<\/p>\n

Rogers also cautions about new threats emerging from artificial intelligence<\/a> (AI).<\/p>\n

\t\t\t\t\t\"Get<\/p>\n

\t\t\t\t\tGet weekly money news<\/p>\n

Get expert insights, Q&A on markets, housing, inflation, and personal finance information delivered to you every Saturday.<\/p>\n

\u201cAI is expected to boost productivity and economic growth over time, but it is sparking concerns about disruption in some sectors and about overinvestment,\u201d she said.<\/p>\n

\u201cAI may also increase the speed, scale and sophistication of cyber attacks.\u201d<\/p>\n

\t\t\t\t\t\t\"Click<\/p>\n

\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t2:02
\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\tBusiness Matters: Canadian insolvency levels hit highest point since 2009\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<\/p>\n

Gravelle then noted high household debt levels in Canada, and said this leaves many Canadians vulnerable to potential economic shocks.<\/p>\n

Story continues below advertisement<\/p>\n

\u201cCanadians continue to carry high levels of debt relative to their income, but overall household wealth has risen,\u201d Gravelle said.<\/p>\n

\u201cThis overall picture masks important differences.<\/p>\n

\u201cSome households face far greater strain than others, and those with the highest debt burden have very little financial flexibility to cope with a job loss or an unexpected expense.<\/p>\n

\u201cThe main concern for both households and businesses is a geopolitical or economic shock that leads to a deep recession and a sharp rise in unemployment.\u201d<\/p>\n

\n\t\t\tMore on Economy
\n\t\t\tMore videos\n\t\t<\/p>\n

Rogers and Gravelle spoke to the media on Thursday following the release of the Financial Stability Report.<\/p>\n

Rogers acknowledged the data that the Bank analyzes does not always reveal the nuances of Canada\u2019s economy, including how small businesses and struggling households are handling their finances.<\/p>\n

This, she explains, is because most of the data that ends up being analyzed factors in the overall performance, and a growing wealth divide between higher and lower incomes<\/a> may not be seen as clearly as a result.<\/p>\n

For example higher revenue corporate businesses may be better able to pay down commercial mortgages, and that may overshadow lower revenue small businesses that are insolvent from falling behind on payments.<\/p>\n

\u201cAt a business level, the data that we have in our financial stability report is really more at a corporate level. It\u2019s harder for us to get data in the small business sector,\u201d she said.<\/p>\n

Story continues below advertisement<\/p>\n

\u201cBut, I think we\u2019re conscious that there are things that the data doesn\u2019t measure well.\u201d<\/p>\n

Rogers said a similar result can be seen among households, where there is \u201cinequality\u201d as a result of the growing divide in wealth<\/a>.<\/p>\n

This is because higher incomes may be better able to pay off mortgages than those with lower incomes, and this leads to an overall clouded picture.<\/p>\n

\u201cThe gains that have helped households, the gains that we talked about that helped us through the mortgage renewals, income increases, increases in household wealth that we talk about in the report, those aren\u2019t spread equally across households, of course \u2014 so there is some inequality there,\u201d she said.<\/p>\n

\u201cThere is no doubt still some households where those gains have either not occurred or not occurred to a level that are helping them deal with the higher cost of living. So there\u2019s still going to be some stress there.\u201c<\/p>\n

Rogers added that regardless of what the data shows, it doesn\u2019t clearly measure how Canadians \u201cfeel\u201d about their finances and the economic outlook.<\/p>\n

\u201cIt can be true that the data looks better and people still feel stressed. Canadians have gone through a lot of economic and financial stress over the last years,\u201d she said.<\/p>\n

\u201cThe headlines feel precarious, [and] things feel uneasy. So even households that are coping well and able to make their debt payments, that all gives us really nice looking data. [But,] I\u2019m sure there\u2019s still a level of stress there.\u201d<\/p>\n

\n\t\t&copy 2026 Global News, a division of Corus Entertainment Inc.\t<\/p>\n","protected":false},"excerpt":{"rendered":"The Bank of Canada says the economy is navigating a \u201cvolatile\u201d global environment and that\u00a0 \u201cvulnerabilities\u201d exist that…\n","protected":false},"author":2,"featured_media":699867,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[52,45,49,48,1849,5427,8334,46,76753,5897,134],"class_list":["post-699866","post","type-post","status-publish","format-standard","has-post-thumbnail","category-economy","tag-bank-of-canada","tag-business","tag-ca","tag-canada","tag-consumer","tag-debt","tag-donald-trump-tariffs","tag-economy","tag-household-debt","tag-iran","tag-money"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts\/699866","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/comments?post=699866"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts\/699866\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/media\/699867"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/media?parent=699866"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/categories?post=699866"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/tags?post=699866"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}