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Bank of Canada cuts growth forecast for 2021, holds key interest rate – CTV News

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OTTAWA —
The Bank of Canada says the domestic economy will grow at a slightly slower pace this year than it previously thought and sees the risks from COVID-19 waning, but not enough to change its trendsetting policy rate.

The central bank said it expects the economy to grow 6.0 per cent in 2021, down from its previous forecast of 6.5 per cent. However, the bank now expects growth of 4.6 per cent in 2022, up from its earlier forecast of 3.7 per cent.

The reason for the shift is a weaker first half of the year than the bank expected as the economy was hampered by lockdowns and restrictions.

With public health restrictions partially or entirely lifted across the country, the central bank now expects consumers to start spending more, including from some of the estimated $200 billion in savings Canadians accumulated during the pandemic that officials previously hadn’t worked into their forecasts.

The bank’s updated economic outlook also said spending shouldn’t be affected by a decline in federal aid as it expects more people to get back to work, meaning they earn more and offset declines in government assistance.

“The reopening of the economy and the strong progress on vaccinations have given us reason to be more optimistic about the direction of the economy,” governor Tiff Macklem said in his opening statement at a late-morning press conference. “But we are not there yet, and we are mindful that the process is likely to be bumpy, and some scars will remain.”

As a result, the bank kept its key policy rate on hold at 0.25 per cent on Wednesday, where it has been since the onset of the pandemic. The bank said it will keep the rate at near-zero until the economy is ready to handle an increase in rates, which it doesn’t expect to happen until the second half of 2022.

The central bank also said that economic conditions have improved enough to allow it to reduce its weekly purchases of federal bonds to $2 billion from $3 billion. The purchases are a stimulus measure, known as quantitative easing, designed to help drive down rates charged on mortgages and business loans.

“With the economic recovery strengthening on the back of easing public health restrictions, it was a prudent move by the Bank to remove some policy support,” said TD senior economist Sri Thanabalasingam.

Macklem said the pace of purchases should slow over time if the economy recovers broadly in line with the bank’s outlook, but future changes will be gradual and deliberate.

BMO chief economist Douglas Porter said he expected the bank to wind down the quantitative easing program by early next year, which would set the stage for rate hikes likely within the ensuing 12 months.

In the scenario the bank laid out Wednesday, inflation runs above three per cent for the rest of the year because of higher gasoline prices and service businesses raising prices as demand returns. Inflation also stays above the Bank of Canada’s two-per-cent target next year and in 2023 because of excess demand before coming back to target in 2024.

Macklem said the factors pushing up inflation are likely to be short-lived, but that the bank will watch them closely in case they become persistent or grow.

“What we’re seeing are some sharp movements in prices, but that doesn’t look like inflation – it’s unlikely to cause ongoing price increases,” he said.

“Sure, there is some uncertainty about this. We will be watching these effects, we will be watching the evolution of inflation very carefully.”

One reason the bank plans to let inflation run hot is because the country’s labour market needs to hire roughly 550,000 people just to reach pre-pandemic employment levels. Macklem said the pace at which those jobs are recovered will vary by industry, and it could take some businesses, such as restaurants, a bit more time to fill positions.

“One of the things we are learning more about is it’s a lot easier to close an economy than it is to reopen one, and particularly in some sectors demand can rebound faster than supply can keep up,” he said.

This report by The Canadian Press was first published July 14, 2021.

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Quick Quotes: What Liberal MPs have to say as the caucus debates Trudeau’s future

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OTTAWA – Here are some notable quotes from Liberal members of Parliament as they headed into a caucus meeting Wednesday where they are set to debate Prime Minister Justin Trudeau’s leadership.

Comments made after the caucus meeting:

“The Liberal party is strong and united.”

Prime Minister Justin Trudeau

———

“Justin Trudeau is reflecting and he’s standing strong and we’re standing strong as a Liberal party.”

“We as a party recognize that the real threat here is Pierre Poilievre and that’s what we’re fighting for.”

“Trudeau has made very clear that he feels he’s the right choice but he appreciates all of what is being said because he’s reflecting on what is being done across Canada. I respect his decision, whatever that may be.”

Charles Sousa, MP for Mississauga—Lakeshore

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“We had some open and frank discussions. People are relentlessly focused on serving Canadians and win the next election. This was really a rallying call to win the next election.”

Industry Minister François-Philippe Champagne, MP for Saint Maurice—Champlain

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“I don’t know how many people spoke, well over 50 I’m sure. They came at this from all angles and now (we’ve) got to go back and process this.

“We’re on a good path.

“It was very respectful. You know, caucus has always had the ability to get into some tough conversations. We did it again today and it went extremely well. Where we land? Who knows? You know we have to go and really process this stuff. But one thing that is absolutely, you know, fundamental is that we are united in the fact that we cannot let that creature from the Conservative party run the country. He would ruin things that people greatly value.”

Ken Hardie, MP for Fleetwood—Port Kells

———

Comments from before the caucus meeting:

“There’s a — what would you call it? Some palace drama going on right now. And that takes us away from the number 1 job, which is focusing on Canadians and focusing on the important policies but also on showing the really clear contrast between our government, our party and Pierre Poilievre.”

Randy Boissonnault, Employment Minister, MP for Edmonton Centre

———

“We’re going to go in there and we’re going to have an excellent discussion and we are going to emerge united.”

Treasury Board President and Transport Minister Anita Anand, MP for Oakville

———

“I think caucus is nervous because of the polling that has been constantly going down in favour of Liberals, and there’s a lot of people who do want to run again. I’m not running again, although I already told the prime minister that. But there are people there that want to run again and they’re nervous because of what polls are saying.”

“He has to start listening.”

Ken McDonald, MP for Avalon

———

“We’re going to have a good caucus meeting. MPs should be free to air their perspectives, I’m sure they will, and we’ll come out of it united.”

Peter Fragiskatos, MP for London North Centre

———

“I have to read the room. There’s all sorts of wheels within wheels turning right now. I’m just going to go in there, I’m going to make my mind a blank and just soak it all in.”

“I’m not going to say anything about (the prime minister) until I have my say in there.”

Ken Hardie, MP for Fleetwood—Port Kells

———

“I wish there was a mechanism for it, yes,” he said, responding to whether he wanted a secret ballot vote in caucus to determine Trudeau’s leadership.

Sean Casey, MP for Charlottetown

———

“The prime minister will always be on my posters and he is welcome in Winnipeg North any time.”

Kevin Lamoureux, MP for Winnipeg North

———

“Absolutely I support the prime minister.”

Yvonne Jones, MP for Labrador

———

“When you look divided, you look weak.”

Judy Sgro, MP for Humber River—Black Creek

———

“I think Pierre Poilievre is absolutely beatable, he’s ripe for the picking with the right vision, the right leadership and the right direction for our party. The Liberal party is an institution in this country. It’s bigger than one person, one leader, and it’s incumbent on us as elected officials to make sure we put the best foot forward.”

Wayne Long, MP for Saint John—Rothesay

This report by The Canadian Press was first published Oct. 23, 2024.



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With Liberal election win, First Nations in N.B. look forward to improved relations

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FREDERICTON – Chief Allan Polchies says he is excited about New Brunswick’s new Liberal provincial government.

Polchies, of St. Mary’s First Nation, says he looks forward to meaningful dialogue with premier-designate Susan Holt after years of tense relations with the outgoing Progressive Conservatives under Blaine Higgs.

He is one of six Wolastoqey Nation chiefs who have filed a land claim for a significant part of the province, arguing treaty rights have not been respected by corporations and governments, both of which have exploited the land for hundreds of years.

The December 2021 court challenge has been a sore point between Indigenous Peoples and the Higgs’s government.

Eight Mi’kmaw communities are also asserting Aboriginal title to land in the province, and they say they hope to work with Holt and her team on “advancing issues that are important to our communities.”

Holt’s campaign didn’t give details on the Liberal government’s position on the Indigenous claims, but she has said she wants to rebuild trust between the province and First Nations.

This report by The Canadian Press was first published Oct. 23, 2024.

The Canadian Press. All rights reserved.



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Abdelrazik tells of despair when Ottawa denied him passport to return home from Sudan

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OTTAWA – Abousfian Abdelrazik told a court today about the roller-coaster of emotions he experienced during the tense days of early 2009 when he awaited the green light to return to Canada from Sudan.

The Sudanese-born Abdelrazik settled in Montreal as a refugee and became a Canadian citizen in 1995.

During a 2003 visit to his native country to see his ailing mother, he was arrested, imprisoned and questioned about suspected terrorist connections.

Abdelrazik says he was tortured during two periods of detention by the Sudanese intelligence agency.

He is suing the federal government, claiming officials arranged for his arbitrary imprisonment, encouraged his detention by Sudanese authorities and actively obstructed his repatriation to Canada for several years.

In March 2009, he made arrangements to fly home to Canada and asked Ottawa to issue him an emergency passport, but his hopes were dashed — at least temporarily — when the request was turned down.

This report by The Canadian Press was first published Oct. 23, 2024.

The Canadian Press. All rights reserved.



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