Economy

Fed leaves interest rates steady as officials debate timing for cuts – The Washington Post

Published

6 months ago

March 20, 2024

The Federal Reserve is still eyeing three interest rate cuts this year, as officials wait for a bit more confidence that inflation is reliably falling to more normal levels.

At the close of their two-day meeting on Wednesday, central bankers left the benchmark interest rate steady at between 5.25 and 5.5 percent. The move was highly expected and leaves borrowing costs at their highest level in 23 years. Officials also released projections that showed three rate cuts to come in 2024, unchanged from their December outlook.

Still, financial markets, analysts, businesses and consumers are eager for a more precise timeline on when the Fed will decide to trim rates. Inflation has eased considerably since soaring to 40-year highs. But price growth is still too fast, and the Fed isn’t ready to declare victory until officials are more certain that inflation is on its way to their 2 percent target.

In a statement, officials noted that economic activity has been expanding “at a solid pace.” But there’s still uncertainty ahead.

“Job gains have remained strong, and the unemployment rate has remained low,” officials said. “Inflation has eased over the past year but remains elevated.”

Every few months, officials release fresh estimates for where they think rates, inflation, growth and the job market are headed. Policymakers now think the economy will grow 2.1 percent this year, up from the 1.4 percent forecast in December. They also expect the unemployment rate will end the year at 4 percent, down slightly from previous estimates. They also predict inflation will end the year at 2.4 percent — in line with previous estimates — and won’t hit the Fed’s 2 percent target until 2026.

Central bankers also slightly revised estimates for rates over the medium term, signaling borrowing costs will be slightly higher in 2025 and 2026 than previously anticipated. (Those forecasts are nonbinding, and policymakers often stress that they could change for myriad factors.)

Federal Reserve Chair Jerome H. Powell will probably shed light on any discussions around the Fed’s vast balance sheet during an afternoon news conference. Officials were expected to look more closely at the pace they are reducing more than $7 trillion in government bond holdings the central bank owns. While lowering the balance sheet is intended to raise yields on longer-term bonds, such moves can cause cracks in the markets and destabilize the financial system if not handled carefully. A decision on whether to change things up could come at subsequent meetings.

After six months of encouraging inflation reports, 2024 has brought unwelcome surprises. First, inflation came in hotter than expected in January. Economists and policymakers were quick to call the report a one-off, saying seasonal glitches and other data quirks often mess with the start of the year. But then February data ticked up slightly, too.

By the time central bankers convened for their two-day meeting this week, they didn’t have a comprehensive picture of whether the past few months have amounted to predictable bumps in the road or the beginning of a more worrisome trend. If officials become convinced that inflation is becoming more persistent or rising yet again, they’d be likelier to leave interest rates higher for longer and not cut them as soon in the future.

Meanwhile, the economy has stayed remarkably strong despite the Fed’s push to slow it down. The job market is still churning, and growth continues at a solid pace. For some officials, that has tempered the desire for cuts, because the economy is clearly forging ahead, and recession fears have faded away.

High prices — especially for basics, such as groceries and rent — continue to be one of the key reasons Americans don’t feel optimistic about the economy, posing a challenge to the Biden administration ahead of November’s presidential election.

The Federal Reserve is loath to get involved in politics, and Powell routinely declines to comment on anything election-related. But as the months pass, the odds grow that the Fed triggers its first cut in the run-up to Election Day, just as Republicans and Democrats try to leverage the economy in their appeals to voters.

Over the past few years, the Fed has gone through multiple stages of its inflation fight. First, officials were late to respond to rising prices in early 2021, betting that the sudden pop was a temporary bug of pandemic recovery. But as it became clear that that message was increasingly out of step with Americans’ daily experiences, the central bank scrambled to hoist rates starting in March 2022.

By that summer, inflation would reach a 40-year peak, due in part to spiking energy costs after Russia’s invasion of Ukraine. Bungled supply chains and labor shortages also pushed prices up on things such as used cars and new clothes.

The Fed pressed on with its aggressive rate hike campaign throughout 2022 and much of 2023, stopping only in July once officials decided that rates were high enough to meaningfully slow the economy. From there, policymakers planned to hold rates high so steep costs for mortgages, car loans and all sorts of business investments could keep pressure on the economy.

Now, Fed leaders are in yet another phase. Inflation has come down considerably, clocking in at 2.4 percent in January over the year before, not far above the central bank’s target of 2 percent using the Fed’s preferred metric.

They’re in no rush to cut rates. But high rates could, in time, bring risks of their own and end up hurting the job market or slowing growth too much.

“We’re waiting to become more confident that inflation is moving sustainably at 2 percent,” Powell told lawmakers during congressional testimony this month. “When we do get that confidence, and we’re not far from it, it’ll be appropriate to begin to dial back the level of restriction so that we don’t, you know, drive the economy into recession.”

Adblock test (Why?)

Source link

Business

A timeline of events in the bread price-fixing scandal

Published

6 hours ago

September 19, 2024

Anne Joseph

Almost seven years since news broke of an alleged conspiracy to fix the price of packaged bread across Canada, the saga isn’t over: the Competition Bureau continues to investigate the companies that may have been involved, and two class-action lawsuits continue to work their way through the courts.

Here’s a timeline of key events in the bread price-fixing case.

Oct. 31, 2017: The Competition Bureau says it’s investigating allegations of bread price-fixing and that it was granted search warrants in the case. Several grocers confirm they are co-operating in the probe.

Dec. 19, 2017: Loblaw and George Weston say they participated in an “industry-wide price-fixing arrangement” to raise the price of packaged bread. The companies say they have been co-operating in the Competition Bureau’s investigation since March 2015, when they self-reported to the bureau upon discovering anti-competitive behaviour, and are receiving immunity from prosecution. They announce they are offering $25 gift cards to customers amid the ongoing investigation into alleged bread price-fixing.

Jan. 31, 2018: In court documents, the Competition Bureau says at least $1.50 was added to the price of a loaf of bread between about 2001 and 2016.

Dec. 20, 2019: A class-action lawsuit in a Quebec court against multiple grocers and food companies is certified against a number of companies allegedly involved in bread price-fixing, including Loblaw, George Weston, Metro, Sobeys, Walmart Canada, Canada Bread and Giant Tiger (which have all denied involvement, except for Loblaw and George Weston, which later settled with the plaintiffs).

Dec. 31, 2021: A class-action lawsuit in an Ontario court covering all Canadian residents except those in Quebec who bought packaged bread from a company named in the suit is certified against roughly the same group of companies.

June 21, 2023: Bakery giant Canada Bread Co. is fined $50 million after pleading guilty to four counts of price-fixing under the Competition Act as part of the Competition Bureau’s ongoing investigation.

Oct. 25 2023: Canada Bread files a statement of defence in the Ontario class action denying participating in the alleged conspiracy and saying any anti-competitive behaviour it participated in was at the direction and to the benefit of its then-majority owner Maple Leaf Foods, which is not a defendant in the case (neither is its current owner Grupo Bimbo). Maple Leaf calls Canada Bread’s accusations “baseless.”

Dec. 20, 2023: Metro files new documents in the Ontario class action accusing Loblaw and its parent company George Weston of conspiring to implicate it in the alleged scheme, denying involvement. Sobeys has made a similar claim. The two companies deny the allegations.

July 25, 2024: Loblaw and George Weston say they agreed to pay a combined $500 million to settle both the Ontario and Quebec class-action lawsuits. Loblaw’s share of the settlement includes a $96-million credit for the gift cards it gave out years earlier.

Sept. 12, 2024: Canada Bread files new documents in Ontario court as part of the class action, claiming Maple Leaf used it as a “shield” to avoid liability in the alleged scheme. Maple Leaf was a majority shareholder of Canada Bread until 2014, and the company claims it’s liable for any price-fixing activity. Maple Leaf refutes the claims.

This report by The Canadian Press was first published Sept. 19, 2024.

Companies in this story: (TSX:L, TSX:MFI, TSX:MRU, TSX:EMP.A, TSX:WN)

Source link

Economy

S&P/TSX composite up more than 250 points, U.S. stock markets also higher

Published

6 hours ago

September 19, 2024

Anne Joseph

TORONTO – Canada’s main stock index was up more than 250 points in late-morning trading, led by strength in the base metal and technology sectors, while U.S. stock markets also charged higher.

The S&P/TSX composite index was up 254.62 points at 23,847.22.

In New York, the Dow Jones industrial average was up 432.77 points at 41,935.87. The S&P 500 index was up 96.38 points at 5,714.64, while the Nasdaq composite was up 486.12 points at 18,059.42.

The Canadian dollar traded for 73.68 cents US compared with 73.58 cents US on Thursday.

The November crude oil contract was up 89 cents at US$70.77 per barrel and the October natural gas contract was down a penny at US2.27 per mmBTU.

The December gold contract was up US$9.40 at US$2,608.00 an ounce and the December copper contract was up four cents at US$4.33 a pound.

This report by The Canadian Press was first published Sept. 19, 2024.

Companies in this story: (TSX:GSPTSE, TSX:CADUSD)

Source link

Economy

Construction wraps on indoor supervised site for people who inhale drugs in Vancouver

Published

21 hours ago

September 18, 2024

Anne Joseph

VANCOUVER – Supervised injection sites are saving the lives of drug users everyday, but the same support is not being offered to people who inhale illicit drugs, the head of the BC Centre for Excellence in HIV/AIDS says.

Dr. Julio Montaner said the construction of Vancouver’s first indoor supervised site for people who inhale drugs comes as the percentage of people who die from smoking drugs continues to climb.

The location in the Downtown Eastside at the Hope to Health Research and Innovation Centre was unveiled Wednesday after construction was complete, and Montaner said people could start using the specialized rooms in a matter of weeks after final approvals from the city and federal government.

“If we don’t create mechanisms for these individuals to be able to use safely and engage with the medical system, and generate points of entry into the medical system, we will never be able to solve the problem,” he said.

“Now, I’m not here to tell you that we will fix it tomorrow, but denying it or ignoring it, or throw it under the bus, or under the carpet is no way to fix it, so we need to take proactive action.”

Nearly two-thirds of overdose deaths in British Columbia in 2023 came after smoking illicit drugs, yet only 40 per cent of supervised consumption sites in the province offer a safe place to smoke, often outdoors, in a tent.

The centre has been running a supervised injection site for years which sees more than a thousand people monthly and last month resuscitated five people who were overdosing.

The new facilities offer indoor, individual, negative-pressure rooms that allow fresh air to circulate and can clear out smoke in 30 to 60 seconds while users are monitored by trained nurses.

Advocates calling for more supervised inhalation sites have previously said the rules for setting up sites are overly complicated at a time when the province is facing an overdose crisis.

More than 15,000 people have died of overdoses since the public health emergency was declared in B.C. in April 2016.

Kate Salters, a senior researcher at the centre, said they worked with mechanical and chemical engineers to make sure the site is up to code and abidies by the highest standard of occupational health and safety.

“This is just another tool in our tool box to make sure that we’re offering life-saving services to those who are using drugs,” she said.

Montaner acknowledged the process to get the site up and running took “an inordinate amount of time,” but said the centre worked hard to follow all regulations.

“We feel that doing this right, with appropriate scientific background, in a medically supervised environment, etc, etc, allows us to derive the data that ultimately will be sufficiently convincing for not just our leaders, but also the leaders across the country and across the world, to embrace the strategies that we are trying to develop.” he said.

Montaner said building the facility was possible thanks to a single $4-million donation from a longtime supporter.

Construction finished with less than a week before the launch of the next provincial election campaign and within a year of the next federal election.

Montaner said he is concerned about “some of the things that have been said publicly by some of the political leaders in the province and in the country.”

“We want to bring awareness to the people that this is a serious undertaking. This is a very massive investment, and we need to protect it for the benefit of people who are unfortunately drug dependent.” he said.

This report by The Canadian Press was first published Sept. 18, 2024.

Source link