The Bank of Canada decided to hold its interest rate steady at 4.5 per cent on Wednesday while the impact of its previous rate hikes filters down through the economy.
After slashing its benchmark lending rate in the early days of the pandemic to keep the economy going, the bank began an aggressive campaign of rate hikes in early 2022 once inflation soared to its highest level in decades.
Canada’s inflation rate peaked at more than eight per cent in June 2022, and as of February 2023 had cooled to just over five per cent. Data for March is set to be released next week and it’s expected to show the rate has cooled to as low as four per cent.
That cooling is why the Bank of Canada has decided to sit on the sidelines for a while.
In announcing its policy decision on Wednesday, the bank said in the accompanying Monetary Policy Report that it now forecasts the official inflation rate will come down to three per cent by the middle of this year, and get down to its two per cent target rate by the end of next year.
“Getting inflation down to three per cent this summer will be welcome relief for Canadians,” Governor Tiff Macklem said at a press conference following the announcement. “But let me assure Canadians that we know our job is not done until we restore price stability.”
“That’s the destination — we are on our way and we will stay the course.”
Bank of Canada deputy governor’s advice to anyone renewing a mortgage
Senior deputy governor Carolyn Rogers says maintaining the level of interest rates may bring up mortgage payments but will, in the long term, stabilize the economy.
The bank left the door open to more rate hikes if necessary down the line, but overall the policymakers at the bank made it clear that they think the rate changes so far are having their desired effect, slowing the economy down enough to bring down inflation.
Carolyn Rogers, the bank’s deputy governor, said the rate hikes already in place “will bring down consumption but that is monetary policy taking effect — bringing demand down in the economy and restoring the balance we need to get inflation back to target.”
Homeowner worried about rate hikes
If the bank is indeed done with rate hikes, it’s not a moment too soon for mortgage holders like Eddie Ko.
He and his wife bought a condo in downtown Toronto five years ago, and locked in their mortgage at the time for five years because they were worried about the uncertainty.
Eddie Ko and his wife bought a condo in Toronto in 2018. Their mortgage is up for renewal this year and they are facing the prospect of having to pay up to $800 more than they have been every month. (Hugo Levesque/CBC)
But that loan is up for renewal this summer, and Ko says they are being offered mortgage rates that will result in a monthly payment of up to $800 more than they’ve been paying every month.
“I was expecting the rates should go up, but it was faster than I expected,” he told CBC News in an interview.
Ko says the family has cut back on everything but absolute necessities, and he’s worried that may not be enough.
“Right now, it’s just living day by day, paycheque by paycheque, and there’s no way for us to save any more extra money for … a rainy day fund.”
Ko and other mortgage holders like him are breathing a sigh of relief that the bank seems to be done with rate hikes — and even potentially considering rate cuts at some point soon.
But Brett House, who teaches economics at Columbia Business School in New York City, says that’s premature.
“They are not going to be in a hurry to cut them when inflation is still above its target and we see pressures that remain quite strong from the real side of the economy,” he told CBC News in an interview. “It’s wishful thinking.”
While bringing inflation down to the two per cent level it targets is the central bank’s top priority, House says the bank will be very much aware of how its recent slew of rate hikes is impacting Canadian households as they renew home loans at higher rates than they have in years.
“I think it is a major concern and it’s one of the reasons why not only is the Bank of Canada reluctant to begin cutting too soon, it’s also reluctant to push rates up further,” House said. “We’re already seeing tightening credit conditions for small businesses and the prospect of household finances being hit by those renewals at higher interest rates will cut into the available spending power or families.”
TORONTO – Canada Goose Holdings Inc. says it has signed a deal that will result in the creation of its first eyewear collection.
The deal announced on Thursday by the Toronto-based luxury apparel company comes in the form of an exclusive, long-term global licensing agreement with Marchon Eyewear Inc.
The terms and value of the agreement were not disclosed, but Marchon produces eyewear for brands including Lacoste, Nike, Calvin Klein, Ferragamo, Longchamp and Zeiss.
Marchon plans to roll out both sunglasses and optical wear under the Canada Goose name next spring, starting in North America.
Canada Goose says the eyewear will be sold through optical retailers, department stores, Canada Goose shops and its website.
Canada Goose CEO Dani Reiss told The Canadian Press in August that he envisioned his company eventually expanding into eyewear and luggage.
This report by The Canadian Press was first published Sept. 19, 2024.
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)
TORONTO – TD Bank Group, which is mired in a money laundering scandal in the U.S., says chief executive Bharat Masrani will retire next year.
Masrani, who will retire officially on April 10, 2025, says the bank’s, “anti-money laundering challenges,” took place on his watch and he takes full responsibility.
The bank named Raymond Chun, TD’s group head, Canadian personal banking, as his successor.
As part of a transition plan, Chun will become chief operating officer on Nov. 1 before taking over the top job when Masrani steps down at the bank’s annual meeting next year.
TD also announced that Riaz Ahmed, group head, wholesale banking and president and CEO of TD Securities, will retire at the end of January 2025.
TD has taken billions in charges related to ongoing U.S. investigations into the failure of its anti-money laundering program.
This report by The Canadian Press was first published Sept. 19, 2024.
