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Bank of Canada holds key rate steady at 5 per cent

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OTTAWA —
The Bank of Canada decided to hold its key interest rate steady on Wednesday amid mounting evidence the economy is slowing, but the central bank isn’t declaring victory yet as it remains cautious to not fuel speculation about rate cuts.

“With recent evidence that excess demand in the economy is easing, and given the lagging effects of monetary policy, governing council decided to hold the policy interest rate at five per cent,” the central bank said in a news release.

However, the Bank of Canada is keeping the door open to more rate hikes, noting its governing council is still concerned about inflationary pressures and “is ready to raise interest rates further if needed.”

Canada’s inflation rate was 3.3 per cent in July, ticking up from 2.8 per cent in the previous month.

Although inflation has slowed considerably since last summer, it’s expected to hover around three per cent for months to come.

The central bank acknowledges that inflation will even likely flare up due to higher gasoline prices before coming back down.

BMO chief economist Douglas Porter said the Bank of Canada’s decision to hold its key rate was widely expected given recent weak economic data. Now, the focus is turning to what the central bank might do next as it wrestles inflation down while trying not to send the economy into a deeper slowdown than necessary.

“They’ve clearly left the door open for the possibility that they might move again,” Porter said.

“(But) our view is that, provided growth remains relatively calm and core inflation does continue to slowly come down, that the Bank of Canada’s probably done hiking interest rates.”

More on this story from BNNBloomberg.ca:

Statistics Canada reported last week real gross domestic product contracted in the second quarter, which convinced forecasters that another rate hike would be unlikely.

“The Canadian economy has entered a period of weaker growth, which is needed to relieve price pressures,” the central bank said.

Canada’s labour market has also lost some of its steam: the unemployment rate has been on the rise for three consecutive months.

Porter says economic growth will likely continue to stall over the next few quarters, making a recession a possibility.

“We might not fall into the the official recession definition, but it’s going to be a close run for sure,” Porter said.

Reaction from Canadian commercial banks on Wednesday was nearly uniform: the central bank is unlikely to raise interest rates again, despite its hawkish tone Wednesday.

But in order to keep inflation expectations in check, economist Tu Nguyen with accounting and consultancy firm RSM Canada said the Bank of Canada will likely hold its key interest rate at five per cent into 2024.

“A premature rate cut could send businesses and consumers out borrowing and spending and risk (reaccelerating) inflation again,” Nguyen said in a statement.

The combination of slowing economic growth and stubborn inflation poses a challenge to the Bank of Canada: the central bank doesn’t want to go overboard with rate hikes but it also doesn’t want to spur speculation about rate cuts that would send demand in a frenzy again.

At the start of the year, the central bank had announced a pause on rate hikes that ultimately came to an end in June, as the economy outperformed expectations and the housing market rebounded.

Porter said the Bank of Canada’s messaging earlier this year on taking a pause was “unfortunate.”

“I’m not sure the bank will ever explicitly say they made a mistake, but I think they were just a little bit too liberal with the with the pause language and it got everyone excited that rate hikes were done,” he said.

Altogether, the central bank has raised its key interest rate ten times since March 2022, bringing it from near-zero to the highest level since 2001.

These rate hikes are expected to continue taking effect on the economy, slowing consumer demand and dampening business investment. Economists estimate it takes about one to two years for a rate hike to fully affect demand and business activity.

Bank of Canada governor Tiff Macklem is set to hold a news conference on Thursday, after delivering a speech to the Calgary Chamber of Commerce.

This report by The Canadian Press was first published Sept. 6, 2023.

 

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Suspicious deaths of two N.S. men were the result of homicide, suicide: RCMP

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Nova Scotia RCMP say their investigation into two suspicious deaths earlier this month has concluded that one man died by homicide and the other by suicide.

The bodies of two men, aged 40 and 73, were found in a home in Windsor, N.S., on Sept. 3.

Police say the province’s medical examiner determined the 40-year-old man was killed and the 73-year-old man killed himself.

They say the two men were members of the same family.

No arrests or charges are anticipated, and the names of the deceased will not be released.

RCMP say they will not be releasing any further details out of respect for the family.

This report by The Canadian Press was first published Sept. 16, 2024.

The Canadian Press. All rights reserved.



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Turning the tide: Quebec premier visits Cree Nation displaced by hydro project in 70s

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For the first time in their history, members of the Cree community of Nemaska received a visit from a sitting Quebec premier on Sunday and were able to share first-hand the story of how they were displaced by a hydroelectric project in the 1970s.

François Legault was greeted in Nemaska by men and women who arrived by canoe to re-enact the founding of their new village in the Eeyou Istchee James Bay region, in northern Quebec, 47 years ago. The community was forced in the early 1970s to move from its original location because members were told it would be flooded as part of the Nottaway-Broadback-Rupert hydro project.

The reservoir was ultimately constructed elsewhere, but by then the members of the village had already left for other places, abandoning their homes and many of their belongings in the process.

George Wapachee, co-author of the book “Going Home,” said community members were “relocated for nothing.”

“We didn’t know what the rights were, or who to turn to,” he said in an interview. “That turned us into refugees and we were forced to abandon the life we knew.”

Nemaska’s story illustrates the challenges Legault’s government faces as it looks to build new dams to meet the province’s power needs, which are anticipated to double by 2050. Legault has promised that any new projects will be developed in partnership with Indigenous people and have “social acceptability,” but experts say that’s easier said than done.

François Bouffard, an associate professor of electrical engineering at McGill University, said the earlier era of hydro projects were developed without any consideration for the Indigenous inhabitants living nearby.

“We live in a much different world now,” he said. “Any kind of hydro development, no matter where in Quebec, will require true consent and partnership from Indigenous communities.” Those groups likely want to be treated as stakeholders, he added.

Securing wider social acceptability for projects that significantly change the landscape — as hydro dams often do — is also “a big ask,” he said. The government, Bouchard added, will likely focus on boosting capacity in its existing dams, or building installations that run off river flow and don’t require flooding large swaths of land to create reservoirs.

Louis Beaumier, executive director of the Trottier Energy Institute at Polytechnique Montreal, said Legault’s visit to Nemaska represents a desire for reconciliation with Indigenous people who were traumatized by the way earlier projects were carried about.

Any new projects will need the consent of local First Nations, Beaumier said, adding that its easier to get their blessing for wind power projects compared to dams, because they’re less destructive to the environment and easier around which to structure a partnership agreement.

Beaumier added that he believes it will be nearly impossible to get the public — Indigenous or not — to agree to “the destruction of a river” for a new dam, noting that in recent decades people have come to recognize rivers as the “unique, irreplaceable riches” that they are.

Legault’s visit to northern Quebec came on Sept. 15, when the community gathers every year to remember the founding of the “New Nemaska,” on the shores of Lake Champion in the heart of the boreal forest, some 1,500 kilometres from Montreal. Nemaska Chief Clarence Jolly said the community invited Legault to a traditional feast on Sunday, and planned to present him with Wapachee’s book and tell him their stories.

The book, published in 2022 along with Susan Marshall, is filled with stories of Nemaska community members. Leaving behind sewing machines and hunting dogs, they were initially sent to two different villages, Wapachee said.

In their new homes, several of them were forced to live in “deplorable conditions,” and some were physically and verbally abused, he said. The new village of Nemaska was only built a few years later, in 1977.

“At this time, families were losing their children to prison-schools,” he said, in reference to the residential school system. “Imagine the burden of losing your community as well.”

Thomas Jolly, a former chief, said he was 15 years old when he was forced to leave his village with all his belongings in a single bag.

Meeting Legault was important “because have to recognize what happened and we have to talk about the repercussions that the relocation had on people,” he said, adding that those effects are still felt today.

Earlier Sunday, Legault was in the Cree community of Eastmain, where he participated in the official renaming of a hydro complex in honour of former premier Bernard Landry. At the event, Legault said he would follow the example of his late predecessor, who oversaw the signing of the historic “Paix des Braves” agreement between the Quebec government and the Cree in 2002.

He said there is “significant potential” in Eeyou Istchee James Bay, both in increasing the capacity of its large dams and in developing wind power projects.

“Obviously, we will do that with the Cree,” he said.

This report by The Canadian Press was first published Sept. 16, 2024.



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Quebec premier visits Cree community displaced by hydro project in 1970s

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NEMASKA – For the first time in their history, members of the Cree community of Nemaska received a visit from a sitting Quebec premier on Sunday and were able to share first-hand the story of how they were displaced by a hydroelectric project in the 1970s.

François Legault was greeted in Nemaska by men and women who arrived by canoe to re-enact the founding of their new village in the Eeyou Istchee James Bay region, in northern Quebec, 47 years ago. The community was forced in the early 1970s to move from their original location because they were told it would be flooded as part of the Nottaway-Broadback-Rupert hydro project.

The reservoir was ultimately constructed elsewhere, but by then the members of the village had already left for other places, abandoning their homes and many of their belongings in the process.

George Wapachee, co-author of the book “Going Home,” said community members were “relocated for nothing.”

“We didn’t know what the rights were, or who to turn to,” he said in an interview. “That turned us into refugees and we were forced to abandon the life we knew.”

The book, published in 2022 by Wapachee and Susan Marshall, is filled with stories of Cree community members. Leaving behind sewing machines and hunting dogs, they were initially sent to two different villages, 100 and 300 kilometres away, Wapachee said.

In their new homes, several of them were forced to live in “deplorable conditions,” and some were physically and verbally abused, he said. The new village of Nemaska was only built a few years later, in 1977.

“At this time, families were losing their children to prison-schools,” he said, in reference to the residential school system. “Imagine the burden of losing your community as well.”

Legault’s visit came on Sept. 15, when the community gathers every year to remember the founding of the “New Nemaska,” on the shores of Lake Champion in the heart of the boreal forest, some 1,500 kilometres from Montreal. Nemaska Chief Clarence Jolly said the community invited Legault to a traditional feast on Sunday, and planned to present him with Wapachee’s book and tell him their stories.

Thomas Jolly, a former chief, said he was 15 years old when he was forced to leave his village with all his belongings in a single bag.

Meeting Legault was important “because have to recognize what happened and we have to talk about the repercussions that the relocation had on people,” he said, adding that those effects are still felt today.

Earlier Sunday, Legault had been in the Cree community of Eastmain, where he participated in the official renaming of a hydro dam in honour of former premier Bernard Landry.

This report by The Canadian Press was first published Sept. 16, 2024.

The Canadian Press. All rights reserved.



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