Despite a slight increase in Canada's inflation rate last month, the Bank of Canada remains determined to bring it down to 2%, with the possibility of another rate hike being considered in September. However, some economists believe that the positive overall figures may allow the Bank to pause on rate increases without a significant negative impact.
The Bank of Canada may shift its focus from the output gap to labor market indicators, such as unemployment and wages, in order to make inflation forecasts and guide its interest rate decisions, according to a report by CIBC economists. The report suggests that the labor market has become a more reliable indicator of excess demand or supply, and forecasts that if the job market outlook suggests it's not necessary, there may be no more rate hikes this year and rate cuts in early 2024.
A majority of Canadians believe that companies are using inflation as an excuse to overcharge them, with this view consistent across all income groups, according to a survey by Modus Research. The public's perception is influenced by reports of record profits for major corporations, causing growing economic anxiety among Canadians.
Canada's upcoming gross domestic product (GDP) reading is expected to be closely watched by the Bank of Canada (BoC) ahead of its September interest rate decision, with economists predicting a slowdown in the second quarter that could lead to a pause in interest rate hikes despite higher-than-expected inflation. The impact of recent wildfires and a dock workers strike is also expected to affect the data.
Professor Isabella Weber's theory of seller's inflation, which argues that firms are passing on cost increases to consumers and benefiting from higher profits, has provoked controversy among economists and attracted attention from major media outlets. Weber's analysis challenges traditional economic theories on inflation and highlights the role of profits in driving price increases, potentially shifting the focus of policy measures towards addressing the power dynamics of capital in the market.
British Columbia Premier David Eby has urged the Bank of Canada to halt further interest rate hikes, stating that another increase could worsen inflation and harm struggling Canadians. Eby emphasized the impact of rising rates on housing and called for a targeted approach to fighting inflation, focusing on housing and infrastructure improvements.
Canada's economy unexpectedly contracted in the second quarter, raising concerns of a possible recession, as declines in housing investment and slower exports and household spending impacted growth. This is likely to lead the central bank to hold interest rates steady.
The Canadian government is facing higher debt servicing costs as interest rates rise, resulting in billions of additional dollars spent on interest payments and less money available for other government priorities, potentially leading to difficult decisions about cutting spending or increasing taxes.
The profitability of energy and mining corporations in Canada has contributed to the inflation crisis by driving up prices, while other industries struggled to pass on increased costs to consumers, according to a report by Statistics Canada. The report highlights the concentrated nature of inflationary pressures and calls attention to the failure of policymakers to address the issue at its source, allowing energy corporations to profit while consumers bear the burden of rising costs.
Canada added 40,000 jobs in August, surpassing economists' expectations, while the unemployment rate remained steady at 5.5%. This positive job growth suggests that the economy is not completely stalled, but the Bank of Canada is not expected to raise interest rates in the near future.
The Canadian dollar strengthened against the US dollar as stronger-than-expected jobs data raised the possibility of another interest rate hike by the Bank of Canada.
Bank of Canada Governor Tiff Macklem suggests that interest rates may not be high enough to bring inflation back down to target, indicating a hawkish approach after keeping borrowing costs at a 22-year high; Macklem highlights the need for more restrictive monetary policy to restore price stability and reduce inflation.
B.C. Premier David Eby risks indirectly influencing the Bank of Canada and driving inflation by urging the bank to not increase interest rates, according to an economist, as politicians' comments and pressure on the bank raise concerns about its independence and effectiveness in tackling inflation.
The Canadian government is taking measures to address affordability challenges, including a cut in Goods and Services Tax, plans to boost the Competition Bureau's power, and an effort to lower food prices; however, economists believe these measures are unlikely to have an immediate impact on inflation or interest rates.
Economists predict that Canada's inflation rate is likely to increase to around four percent in August, mainly due to higher gasoline prices, reversing the previous progress made.
Canada's inflation rate rose to 4.0% in August, driven by higher gasoline prices, while the Trans Mountain oil pipeline expansion is expected to disrupt oil flow to the US, potentially increasing prices, according to Statistics Canada. US Treasury Secretary Janet Yellen believes the US economy can withstand near-term risks such as strikes, government shutdowns, student loan payments, and spillovers from China's economic woes, stating evidence of a healthy labor market and consumer spending. Rent is rising faster in Brampton than in any other Canadian city, leading to financial difficulties for renters.
High inflation is leading to increased labor action in Canada as workers demand higher wages to combat the eroded purchasing power caused by rising costs of living, according to a report by RBC Economics. The report suggests that taming inflation is crucial to restoring peace in labor relations in the country.
Consumers perceive inflation as much higher than official figures indicate at the moment, largely due to sharp increases in the price of things like restaurant dining, hotel accommodation, and gasoline.
The federal industry minister, Francois-Philippe Champagne, has begun reaching out to foreign companies to promote investment in Canada in an effort to create more competition and lower prices, particularly in the grocery sector. This move comes in response to the need for increased competition in Canada's grocery industry and rising food prices impacting consumers.
Bank of Canada Governor Tiff Macklem has stated that aggressive interest-rate hikes are reducing demand and bringing down inflation, but policymakers remain concerned about the lack of downward momentum in inflation measures and are analyzing how a slowing economy will affect future price pressures.
Canadian businesses and consumers are feeling the impact of higher interest rates, resulting in reduced spending and subdued sales, although inflation expectations remain high, posing a challenge for the Bank of Canada's upcoming interest-rate decision.
Canada's annual inflation rate falls to 3.8% in September, grocery prices rise more slowly.
Canada's inflation rate decelerated to 3.8% in September, lower than economists were expecting, due to lower prices for various goods and services, including travel, durable goods, and some grocery items.
Canada's inflation rate slowed to 3.8% in September, supporting predictions of the Bank of Canada keeping interest rates steady.
The Bank of Canada is expected to keep its key interest rate steady as the Canadian economy faces higher interest rates and declining inflation.
The Bank of Canada is expected to keep interest rates unchanged as the economy stagnates, but it may signal the possibility of future rate hikes due to inflation exceeding its target.
Canada is experiencing an economic slowdown, with flat growth, rising unemployment, sluggish retail sales, and slowing inflation, leading economists to predict that the Bank of Canada will keep interest rates unchanged at 5% and end its rate increase campaign.
Bank of Canada Governor Tiff Macklem and Senior Deputy Governor Carolyn Rogers discussed government spending, housing supply, negative growth, recession, higher bond yields, Middle East conflict and energy prices, movement in the Canadian dollar, import inflation, and relying on interest rate hikes to tackle inflation.
