2012.06.01 17:42:24 MARKET TALK: BOC May Have Erred In Not Hiking Rates -Nomura

11:41 (Dow Jones) The Bank of Canada might have made a mistake in not hiking rates by now, according to Nomura Securities economist Charles St. Arnaud. The issue is housing, particularly concerns about a bubble in Toronto. Low rates are driving demand for houses and leading to higher household debt. 1Q GDP report showed that housing investment in Canada rose 2.9%, the fastest pace in two years. "It can come to a very sharp end very quickly. That's a concern," St. Arnaud says. It's a "complicated situation" with "a lot of different moving parts," but "the more I look at it, the more I think the Bank of Canada may have made a mistake not increasing rates earlier," he says. With 1Q GDP undershooting the Bank of Canada's forecast, increased uncertainty from the euro-zone crisis, and US and Asian data that indicates slowing growth, now "they're stuck in a place where it's harder for them to act," St. Arnaud says. (nirmala.menon@dowjones.com) Call us at (212) 416-3100 or email bradley.davis@dowjones.com (END) Dow Jones Newswires June 01, 2012 11:42 ET (15:42 GMT)