Article content

Canada is not alone in having its central bank backed into a corner, forced to warn about the dangers of high debt and hot housing markets, while powerless to change interest rates as a commodity bust weighs on the economy.

Economists at Bank of America Merrill Lynch have now grouped together Canada, Australia and New Zealand as part of a trio heading for “an unwinding.” They blame the complicated situation on the crash in oil and metal prices, and a surge of money into real estate.

We apologize, but this video has failed to load.

tap here to see other videos from our team. Try refreshing your browser, or Canadians, Aussies and Kiwis trapped in 'commodity bust, housing boom' cycle and the unwinding is going to be painful Back to video

The end result is expected to be a “painful unwinding” in the medium term.

“Canada, Australia and New Zealandhave all facedcommodity shocks that havehampered growth and left the economy highly dependenton housing activity,” a team of BofAML economists wrote in their report. “Despite mounting financial stability risks, central banks in these regions arestuck with low rates to stimulate growth.”