The Bank of Canada held its key overnight interest rate at five per cent as widely expected by economists and markets in light of recent signs the domestic economy is slowing and unemployment is ticking up.
“With further signs that monetary policy is moderating spending and relieving price pressures, Governing Council decided to hold the policy rate,” the central bank said in a Dec. 6 statement.
However, the Bank of Canada cautioned that inflation concerns remain and it is prepared to raise rates further “if needed.”
Further hikes won’t happen if there is sustained easing in core inflation, with the central bank keeping an eye on other trends including wage growth and corporate pricing behaviour.
“The Bank remains resolute in its commitment to restoring price stability for Canadians,” the statement read.
Jules Boudreau, senior economist at Mackenzie Investments, noted that the Bank of Canada did not drop its cautionary statement about the possibility of hiking rates further even though in his view that’s extremely unlikely to happen.
“It’s clear that the Governing Council won’t risk removing that statement before it is ready to begin cutting,” the economist said, adding that “tame rhetoric” in early 2023 was misinterpreted, a scenario central bankers will not want to risk repeating.
“At the start of 2023, markets, consumers, and businesses saw the bank’s tame rhetoric around rates as an indication that it was done hiking,” Boudreau said, adding that this provoked a rebound in growth, inflation and the housing market. In June and July, after two consecutive pauses, the Bank of Canada raised the key overnight rate by a total of 50 basis points to five per cent.
James Orlando, a senior economist at Toronto-Dominion Bank, said an interest rate cut is likely, but not until April.
“With inflation still above three per cent, we get why the BoC (Bank of Canada) isn’t ready to declare victory,” he wrote in a Dec. 6 note.
“Instead, the BoC seems like it is preparing to sit on the sidelines for the next couple of months while maintaining its cautious rhetoric.”
Andrew DiCapua, senior economist at the Canadian Chamber of Commerce, said businesses would take some comfort from the latest rate decisions, but he cautioned against optimism about rate cuts, particularly if they are expected before the second quarter.
“Many factors can complicate the timing of cuts, including the persistence of core inflation, the strength of the housing market, and whether first-quarter GDP continues negative growth,” DiCapua said.
“What’s even more concerning is that households are being squeezed by significant increases in mortgage interest payments, with nearly $190 billion in renewals expected next year,” said DiCapua.
“Payments could increase anywhere from 20 to 50 per cent, depending on the type of mortgage, putting Canadian families under unprecedented pressure, and further restraining spending in the economy.”
Canada’s economic growth stalled through the middle quarters of 2023, with real GDP contracting at a rate of 1.1 per cent in the third quarter following growth of 1.4 per cent in the second quarter.
“Higher interest rates are clearly restraining spending,” the Bank of Canada said, noting that consumption growth in the last two quarters was close to zero and business investment has been volatile but essentially flat over the past year.
While government spending and new home construction provided a boost, the labour market continued to ease, with job creation slower than labour force growth and the unemployment rate rising modestly.
“Overall, these data and indicators for the fourth quarter suggest the economy is no longer in excess demand,” the central bank said.
The slowdown in the economy is reducing inflationary pressures in a growing range of goods and services, which, combined with the drop in gas prices, contributed to the easing of CPI inflation to 3.1 per cent in October.
The central bank noted that shelter price inflation is an outlier, and actually picked up as a result of faster growth in rent and other housing costs alongside continued elevated mortgage interest costs.
Core inflation, the central bank’s preferred measure, has been around 3.5 to four per cent in recent months, with the October data coming in towards the lower end of this range.
Growth in the euro area has already weakened and, combined with lower energy prices, this has reduced inflationary pressures.
The Bank of Canada will make its next key interest rate announcement on Jan. 24, 2024, along with its full outlook for the economy and inflation.
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)
The Canadian Press. All rights reserved.
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)
The Canadian Press. All rights reserved.
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.
The Canadian Press. All rights reserved.
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