One analyst claims that the Bank of Canada’s warning about the mounting risk that higher borrowing costs pose to Canadian households will prevent the central bank from hiking rates further.

The Bank of Canada expressed concern about Canadians’ ability to handle financial pressures in its Financial System Review, which was published on Thursday. The bank noted that homeowner equity has decreased as a result of the recent slide in property prices and that mortgages are set to renew in the next several years.

According to John Silvia, the founder of Dynamic Economic Strategy, “it suggests that the housing market is taking the burnt of interest rate increases,” in an interview on Thursday.

He declared that he does not anticipate the BoC hiking rates further because Canadian households are currently experiencing interest rate adjustments and would surely encounter difficulties in the future.

The median debt service ratios (DSRs) for homeowners have significantly grown, according to central bank data. The DSR grew from 16 to over 19 percent last year, and the proportion of new mortgages with a DSR of over 25 percent rose from 12 to 29 percent. The information shows that Canadian debtors’ financial flexibility has decreased.

Silvia ruled out the prospect of rate reduction by the North American central banks as a means of reducing some of these pressures.

The wager that the Bank of Canada or the U.S. Federal Reserve would cut interest rates is impossible because it simply won’t happen, he said.

He cited the high rates of inflation as the primary justification for keeping rates where they are.

Statistics Canada’s most recent consumer price index for Canada showed an increase in inflation to 4.4% for April. This number exceeded economists’ expectations.

The fact that the central banks are dealing with sticky inflation, which is likely to last for some time, was furthered by Silvia, who argued that they should stick to their stance on monetary policy.

My prediction is that they’ll keep pausing, he said.