Business

Bank of Canada expected to push interest rates into restrictive territory

Published

2 years ago

September 2, 2022

OTTAWA, Sept 1 (Reuters) – The Bank of Canada is widely expected to deliver yet another oversized interest rate hike next week, lifting its policy rate into restrictive territory for the first time in two decades, but bets are split on whether or not a pause will follow.

BoC Governor Tiff Macklem has made clear the central bank is focused on getting “to the top end or slightly above” the neutral rate, the range from 2% to 3% where monetary policy neither stimulates nor weighs on the economy. The neutral range has declined over the last 20 years.

That should happen on Sept. 7, with money markets leaning toward a hike of 75 basis points, which would take the policy rate to 3.25%. That would be the fourth oversized rate increase this year, capping 300 basis points of tightening since March.

Some economists predict the Canadian central bank may signal a pause after its anticipated hike next week, especially after the release on Wednesday of GDP data that suggested the economy may be cooling faster than expected.

“Having front-loaded rate hikes, the Bank of Canada may want to pause it’s hiking cycle allowing the economy time to catch up,” said Taylor Schleich, director of economics and strategy at National Bank Financial. Schleich expects a 75-basis point hike on Sept. 7.

“From there, we think it becomes a message of data dependence,” he said, noting that inflation and employment data both outweigh GDP in terms of importance to the central bank.

Canadian inflation cooled in July to an annual rate of 7.6% from 8.1% in June, but remains far above the central bank’s 2% target, while the jobless rate is at a record low of 4.9%.

With underlying price pressures still heating up, money markets are betting on two quarter-percentage-point rate hikes after September, which would lift the policy rate to 3.75% by the end of this year.

Already facing criticism for responding too slowly when inflation started to take off last year, the central bank may be inclined to lean toward a more restrictive stance.

“The Bank of Canada is trying defend its credibility as an inflation targeter,” said Andrew Kelvin, chief Canada strategist at TD Securities. “Falling short of market expectations would raise uncomfortable questions around the BoC’s commitment to the inflation target.”

Still, he sees the market call of a 3.75% policy rate as too steep, expecting it instead to hit a cycle peak at 3.50% in October.

Other economists do not rule out surprises. Doug Porter, chief economist at BMO Capital Markets, noted that nominal spending is “barreling ahead” at its fastest rate – outside the initial coronavirus pandemic bounce – since 1981.

“We now look for a 75-bp hike next week, with an outside chance of a larger move (a la their July 100 bp surprise),” Porter said in a note.

Ultimately, inflation will be the deciding factor.

“At the end of the day, the mandate is 2% inflation. If that doesn’t continue to moderate, there will be no choice but to keep things restrictive and keep hiking,” National Bank Financial’s Schleich said.

Reporting by Julie Gordon in Ottawa and Fergal Smith in Toronto; Editing by Paul Simao

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Business

Restaurant Brands reports US$357M Q3 net income, down from US$364M a year ago

Published

4 hours ago

November 5, 2024

Anne Joseph

TORONTO – Restaurant Brands International Inc. reported net income of US$357 million for its third quarter, down from US$364 million in the same quarter last year.

The company, which keeps its books in U.S. dollars, says its profit amounted to 79 cents US per diluted share for the quarter ended Sept. 30 compared with 79 cents US per diluted share a year earlier.

Revenue for the parent company of Tim Hortons, Burger King, Popeyes and Firehouse Subs, totalled US$2.29 billion, up from US$1.84 billion in the same quarter last year.

Consolidated comparable sales were up 0.3 per cent.

On an adjusted basis, Restaurant Brands says it earned 93 cents US per diluted share in its latest quarter, up from an adjusted profit of 90 cents US per diluted share a year earlier.

The average analyst estimate had been for a profit of 95 cents US per share, according to LSEG Data & Analytics.

This report by The Canadian Press was first published Nov. 5, 2024.

Companies in this story: (TSX:QSR)

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Business

Electric and gas utility Fortis reports $420M Q3 profit, up from $394M a year ago

Published

4 hours ago

November 5, 2024

Anne Joseph

ST. JOHN’S, N.L. – Fortis Inc. reported a third-quarter profit of $420 million, up from $394 million in the same quarter last year.

The electric and gas utility says the profit amounted to 85 cents per share for the quarter ended Sept. 30, up from 81 cents per share a year earlier.

Fortis says the increase was driven by rate base growth across its utilities, and strong earnings in Arizona largely reflecting new customer rates at Tucson Electric Power.

Revenue in the quarter totalled $2.77 billion, up from $2.72 billion in the same quarter last year.

On an adjusted basis, Fortis says it earned 85 cents per share in its latest quarter, up from an adjusted profit of 84 cents per share in the third quarter of 2023.

The average analyst estimate had been for a profit of 82 cents per share, according to LSEG Data & Analytics.

This report by The Canadian Press was first published Nov. 5, 2024.

Companies in this story: (TSX:FTS)

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Business

Thomson Reuters reports Q3 profit down from year ago as revenue rises

Published

4 hours ago

November 5, 2024

Anne Joseph

TORONTO – Thomson Reuters reported its third-quarter profit fell compared with a year ago as its revenue rose eight per cent.

The company, which keeps its books in U.S. dollars, says it earned US$301 million or 67 cents US per diluted share for the quarter ended Sept. 30. The result compared with a profit of US$367 million or 80 cents US per diluted share in the same quarter a year earlier.

Revenue for the quarter totalled US$1.72 billion, up from US$1.59 billion a year earlier.

In its outlook, Thomson Reuters says it now expects organic revenue growth of 7.0 per cent for its full year, up from earlier expectations for growth of 6.5 per cent.

On an adjusted basis, Thomson Reuters says it earned 80 cents US per share in its latest quarter, down from an adjusted profit of 82 cents US per share in the same quarter last year.

The average analyst estimate had been for a profit of 76 cents US per share, according to LSEG Data & Analytics.

This report by The Canadian Press was first published Nov. 5, 2024.

Companies in this story: (TSX:TRI)

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