For years now, central banks around the world have helped consumers and businesses weather economic storms. In crisis after crisis, they cut interest rates to help people get through. They printed money and bought bonds to prop up markets.
This time, those same banks are actively making life more difficult.
“I’m sure some of this does feel a bit counterintuitive,” Bank of Canada governor Tiff Macklem said.
The Bank of Canada has raised interest rates six times since March. Rates have shot up from 0.25 per cent to 3.75 per cent. And the bank has warned it’s not done yet.
“We do think we still need to raise rates a little bit further,” Macklem told CBC News in an interview this week. “How far, we will see.”
In a wide-ranging interview, Bank of Canada governor Tiff Macklem tells CBC’s Peter Armstrong that Canadians should expect more interest rate hikes, and a mild recession is possible, as the central bank continues its fight against inflation.
The bank is raising rates now to rein in inflation that has reached its highest level in decades. Increasing rates is expected to slow the economy. So, Canadians who are already struggling to keep up with the rising cost of living are now facing higher borrowing costs. And those higher borrowing costs will drive down the economy.
“We actually think growth is going to be close to zero for the next few quarters, until about the middle of next year,” Macklem said.
He says that slowdown in economic activity should be short and not very deep. But it will have an impact.
“[The] unemployment rate is going to go up. We’re not talking about high unemployment rates that we’ve seen in past recessions, but it is going to go up,” he said.
‘People are frustrated’
Macklem says he understands how Canadians are feeling.
“People are frustrated. They feel helpless,” he said.
Canadian consumers aren’t the only ones who are frustrated. Economist Jim Stanford from the Canadian Centre for Policy Alternatives says the central bank has pushed rates too high, too quickly. Central banks around the world are looking at the current state of inflation, he said, and assuming both the cause and the solution are the same as the last inflation crisis in the 1970s and ’80s.
“Policy-makers at the Bank of Canada and the government and academia, I think, are unduly obsessed with what happened in the 1970s. It’s like a nightmare,” Stanford said in an interview with CBC News.
In the 1970s, real wages were rising along with prices. This time, real wages have fallen. In the 1970s, corporate profits were falling. Right now, corporate profits have surged to record levels.
“So this is the exact opposite of what we experienced in the 1970s. And pulling out a 50-year-old recipe and applying it again to today’s situation is absolutely inappropriate,” Stanford said.
He says the central bank should pause its relentless rate hikes and see if inflation really does need more of a push.
Headline inflation has slowed. Supply-chain issues are beginning to unwind. Global commodity costs have begun to fall.
New numbers won’t slow rate hikes: economist
The latest inflation numbers will be released on Nov. 16.
But RBC economist Claire Fan says this latest batch of numbers won’t do much to slow rate hikes.
“Consumer price growth in Canada likely ticked higher in October. We expect the annual rate to have risen to seven per cent, up from 6.9 per cent in September but still down from the 8.1 per cent recent peak in June,” Fan said in a note to clients.
She says a resurgence in gas and fuel oil prices was driving the increase, which should give the Bank of Canada enough reason to keep pushing rates higher.
How has inflation and the high cost of living impacted you? Tell us your story in an email to ask@cbc.ca or join us live in the comments below.
A rebound in the price of gasoline likely drove inflation higher again in October. (Joseph Prezioso/AFP/Getty Images)
“While there are signs that inflation is past its peak in Canada, it will likely take a sustained period of higher interest rates and a weaker economy for price growth to ease fully back to central bank target rates,” she wrote.
The RBC forecast assumes the bank will hike the rate by another 25 basis points in early December and then pause to assess the impact all of those rate hikes have had on the economy.
But it means anyone with a variable rate mortgage or a home equity line of credit is looking at yet another boost to their monthly payments.
‘We are getting closer’
Macklem says he knows these rate hikes are making life harder for many Canadians.
“We don’t want to make this more difficult than it has to be,” he said. “But at the same time, if we don’t do enough, if we’re half-hearted, Canadians are going to have to continue to endure the high inflation that is harming them every day.”
And that’s the risk here, analysts say. If the bank pauses too soon and finds inflation is still rising, it will have to take even more aggressive measures down the road. If it overshoots and keeps hiking once inflation is coming down in a sustainable way, then Canadians will needlessly suffer.
Macklem, left, speaks with CBC’s Peter Armstrong in Toronto on Thursday. (Evan Mitsui/CBC)
The window to get this right is getting smaller and smaller.
“We do think that there is a need for further increases, but we are getting closer to the end of this tightening cycle. I can’t tell you exactly what that is,” Macklem said.
“We’re not there yet. But we are getting closer.”
The good news is that Macklem believes we should be in a much better place by the middle of next year. The bad news is that the middle of next year is a long way off for anyone struggling to put food on their table or pay their mortgage payment today.
Montreal Alouettes wide receiver Tyson Philpot has announced he will be out for the rest of the CFL season.
The Delta, B.C., native posted the news on his Instagram page Thursday.
“To Be Continued. Shoutout my team, the fans of the CFL and the whole city of Montreal! I can’t wait to be back healthy and write this next chapter in 2025,” the statement read.
Philpot, 24, injured his foot in a 33-23 win over the Hamilton Tiger-Cats on Aug. 10 and was placed on the six-game injured list the next week.
The six-foot-one, 195-pound receiver had 58 receptions, 779 yards and five touchdowns in nine games for the league-leading Alouettes in his third season.
Philpot scored the game-winning touchdown in Montreal’s Grey Cup win last season to punctuate a six-reception, 63-yard performance.
This report by The Canadian Press was first published Sept. 12, 2024.
NAPA, Calif. (AP) — David Lipsky shot a 7-under 65 on Thursday at Silverado Country Club to take a one-stroke lead after the first round of the Procore Championship.
Winless in 104 events since joining the PGA Tour in 2022, Lipsky went out with the early groups and had eight birdies with one bogey to kick off the FedEx Cup Fall series at the picturesque course in the heart of Napa Valley wine country.
After missing the cut in his three previous tournaments, Lipsky flew from Las Vegas to Arizona to reunite with his college coach at Northwestern to get his focus back. He also spent time playing with some of the Northwestern players, which helped him relax.
“Just being around those guys and seeing how carefree they are, not knowing what’s coming for them yet, it’s sort of nice to see that,” Lipsky said. “I was almost energized by their youthfulness.”
Patton Kizzire and Mark Hubbard were a stroke back. Kizzire started on the back nine and made a late run with three consecutive birdies to move into a tie for first. A bogey on No. 8 dropped him back.
“There was a lot of good stuff out there today,” Kizzire said. “I stayed patient and just went through my routines and played well, one shot at a time. I’ve really bee working hard on my mental game and I think that allowed me to rinse and repeat and reset and keep playing.”
Mark Hubbard was at 67. He had nine birdies but fell off the pace with a bogey and triple bogey on back-to-back holes.
Kevin Dougherty also was in the group at 67. He had two eagles and ended his afternoon by holing out from 41 yards on the 383-yard, par-4 18th.
Defending champion Sahith Theegala had to scramble for much of his round of 69.
Wyndham Clark, who won the U.S. Open in 2023 and the AT&T at Pebble Beach in February, had a 70.
Max Homa shot 71. The two-time tournament champion and a captain’s pick for the President’s Cup in two weeks had two birdies and overcame a bogey on the par-4 first.
Stewart Cink, the 2020 winner, also opened with a 71. He won The Ally Challenge last month for his first PGA Tour Champions title.
Three players from the Presidents Cup International team had mix results. Min Woo Lee shot 68, Mackenzie Hughes of Dundas, Ont., 69 and Corey Conners of Listowel, Ont., 73. International team captain Mike Weir of Brights Grove, Ont., also had a 69.
Ben Silverman of Thornhill, Ont., had a 68, Nick Taylor of Abbotsford, B.C., and Roger Sloan of Merritt, B.C., shot 70 and Adam Svensson of Surrey, B.C., had a 71.
Lipsky was a little shaky off the tee for much of the afternoon but made up for it with steady iron play that left him in great shape on the greens. He had one-putts on 11 holes and was in position for a bigger day but left five putts short.
Lipsky’s only real problem came on the par-4 ninth when his approach sailed into a bunker just shy of the green. He bounced back nicely with five birdies on his back nine. After missing a 19-foot putt for birdie on No. 17, Lipsky ended his day with a 12-foot par putt.
That was a big change from last year when Lipsky tied for 30th at Silverado when he drove the ball well but had uneven success on the greens.
“Sometimes you have to realize golf can be fun, and I think I sort of forgot that along the way as I’m grinding it out,” Lipsky said. “You’ve got to put things in perspective, take a step back. Sort of did that and it seems like it’s working out.”
Laird stayed close after beginning his day with a bogey on the par-4 10th. The Scot got out of the sand nicely but pushed his par putt past the hole.
Homa continued to have issues off the tee and missed birdie putts on his final four holes.
GUADALAJARA, Mexico – Canada’s Marina Stakusic is moving on to the quarterfinals of the Guadalajara Open.
The Mississauga, Ont., native defeated the tournament top seed, Jelena Ostapenko of Latvia, 6-3, 5-7, 7-6 (0) in the round of 16 on Thursday.
Stakusic faced a 0-4 deficit in the third and final set before marching back into the match.
The 19-year-old won five of the next six games to even it up before exchanging games to force a tiebreaker, where Stakusic took complete control to win the match.
Stakusic had five aces with 17 double faults in the three-hour, four-minute match.
However, she converted eight of her 18 break-point opportunities.
This report by The Canadian Press was first published Sept. 13, 2024.
