Bank of Canada Governor David Dodge angrily criticized the Canada Mortgage and Housing Corp. forbringing out new products that he felt would increase inflationary pressures, a just-released letter shows.

The June 30 letter, which was obtained by the Canadian Press news agency under an access to information request, was sent by Dodge to Karen Kinsley, the CEO ofCMHC.

Dodge was upset by aCMHC announcement two days earlier.

"I read with interest and dismay your press release of June 28 which indicated that CMHC would offer mortgage insurance for interest-only loans and for amortizations of up to 35 years," Dodge wrote in the letter, the news agency said.

"Particularly disturbing to me is the rationale you gave that 'these innovative solutions will allow more Canadians to buy homes and to do so sooner.'"

Dodge said the new lending policieswere likely to drive up house prices, making themless affordable. He called CMHC's actions "very unhelpful."

Dodge and Kinsley had a private meeting in July when they patched things up, Canadian Press reported.

Internal documents from CMHC reportedly showthat the Bank of Canada was reassuredthat there would be no change in CMHC's mortgage qualification criteria.

Earlier this month, finance minister Jim Flaherty threw cold wateron a report that Ottawa was considering selling off CMHC's mortgage insurance and securitization businesses.