The Bank of Canada’s decision to hold interest rates steady may be dominating the economic headlines this week, but one strategist says Canada’s surging population will have the biggest impact on Canada’s economy, from the housing market to productivity.

Ed Devlin, Founder of Devlin Capital, Senior Fellow at C.D. Howe Institute and Former Head of Canadian Portfolio Management at PIMCO, says Canada has brought in an extensive number of immigrants post-pandemic, but many of them are in school, “which isn’t producing a lot of GDP,” he told BNN Bloomberg in a recent interview.

He also looks at how population growth is impacting the housing market and says it is something “the Bank of Canada can’t really control” despite it having an effect on inflation numbers.

Devlin says that with rates rising 500 points in less than three years, the housing market should have corrected itself by now, but that hasn’t happened.

“Flow of immigration post pandemic has complicated the housing market situation,” he said.

He says what will happen with the housing market once rates come down is a major risk to the outlook, given how many Canadians are waiting on the sidelines to buy a home.

“If housing prices move up, if shelter costs move up, that’s inflationary,” he said.

He adds that if Canadians continue to disproportionally allocate most of their income to residential housing, it could be a bit of a drag on Canadian productivity.

Ultimately, Devlin says he is “very pro-immigration”. However, he says the exogenous shock that immigration causes will take some time to work through the system and “this is a big issue facing the bank.”