The Bank of Canada is keeping its key interest rate target on hold at 0.25 per cent, saying economic conditions still require it even if things are going better than anticipated.
In a statement, the central bank says it expects economic growth in the first quarter of 2021 to be positive, as opposed to its previous forecast in January for a contraction to start the year.
The bank’s senior decision-makers say resilience in the economy has to do with consumers and businesses adapting to new rounds of lockdowns and restrictions.
The statement also points to a stronger-than-expected housing market as a driver of an expected rise in real gross domestic product for the first three months of the year.
But the central bank warns of considerable uncertainty about the path of the pandemic that muddies longer-term economic outlooks, including how long it will take for the labour market to recover from historic losses last year.
The statement from the bank also points to new, more transmissible variants of COVID-19 as the biggest risk to an economic recovery, warning localized outbreaks could “restrain growth and add choppiness to the recovery.”
The bank says its key policy rate will stay at 0.25 per cent until the economy recovers and inflation is back at its two per cent comfort zone, which it doesn’t see happening until 2023.
The statement from the central bank also says it will continue its quantitative easing program, which is a way for central banks to pump money into the economy.
CIBC senior economist Royce Mendes writes that the communique from the bank fell short of pulling forward the timing of when the economy may heal enough to raise rates, which many experts now believe could occur late next year.
The key policy rate has been at 0.25 per cent for almost exactly one year after the central bank cut rates three times last March at the onset of the COVID-19 pandemic, bringing it to the lower effective bound, meaning the lowest it can go.
The Bank of Canada is scheduled to release its updated economic outlook late next month as part of its quarterly monetary policy report.
This report by The Canadian Press was first published March 10, 2021
Canada’s manufacturers ask for federal help as Montreal dockworkers stage partial-strike
MONTREAL (Reuters) – Canada‘s manufacturers on Monday asked the federal government to curb a brewing labor dispute after dockworkers at the country’s second largest port said they will work less this week.
Unionized dockworkers, who are in talks for a new contract since 2018, will hold a partial strike starting Tuesday, by refusing all overtime outside of their normal day shifts, along with weekend work, they said in a statement on Monday.
The Canadian Union of Public Employees (CUPE) Quebec’s 1,125 longshore workers at the Port of Montreal rejected a March offer from the Maritime Employers Association.
The uncertainty caused by the labour dispute has led to an 11% drop in March container volume at the Montreal port on an annual basis, even as other eastern ports in North America made gains, the Maritime Employers Association said.
The move will cause delays in a 24-hour industry, the association said.
“Some manufacturers have had to redirect their containers to the Port of Halifax, incurring millions in additional costs every week,” said Dennis Darby, chief executive of the Canadian Manufacturers and Exporters (CME).
While the government strongly believes a negotiated agreement is the best option for all parties, “we are actively examining all options as the situation evolves,” a spokesman for Federal Labor Minister Filomena Tassi said.
Last summer’s stoppage of work cost wholesalers C$600 million ($478 million) in sales over a two-month period, Statistics Canada estimates.
($1 = 1.2563 Canadian dollars)
(Reporting By Allison Lampert in Montreal. Additional reporting by Julie Gordon in Ottawa; Editing by Marguerita Choy)
Canada scraps export permits for drone technology to Turkey, complains to Ankara
OTTAWA (Reuters) –Canada on Monday scrapped export permits for drone technology to Turkey after concluding that the equipment had been used by Azeri forces fighting Armenia in the enclave of Nagorno-Karabakh, Foreign Minister Marc Garneau said.
Turkey, which like Canada is a member of NATO, is a key ally of Azerbaijan, whose forces gained territory in the enclave after six weeks of fighting.
“This use was not consistent with Canadian foreign policy, nor end-use assurances given by Turkey,” Garneau said in a statement, adding he had raised his concerns with Turkish Foreign Minister Mevlut Cavusoglu earlier in the day.
Ottawa suspended the permits last October so it could review allegations that Azeri drones used in the conflict had been equipped with imaging and targeting systems made by L3Harris Wescam, the Canada-based unit of L3Harris Technologies Inc.
In a statement, the Turkish Embassy in Ottawa said: “We expect our NATO allies to avoid unconstructive steps that will negatively affect our bilateral relations and undermine alliance solidarity.”
Earlier on Monday, Turkey said Cavusoglu had urged Canada to review the defense industry restrictions.
The parts under embargo include camera systems for Baykar armed drones. Export licenses were suspended in 2019 during Turkish military activities in Syria. Restrictions were then eased, but reimposed during the Nagorno-Karabakh conflict.
Turkey’s military exports to Azerbaijan jumped sixfold last year. Sales of drones and other military equipment rose to $77 million in September alone before fighting broke out in the Nagorno-Karabakh region, data showed.
(Reporting by David Ljunggren in Ottawa and Tuvan Gumrukcu in Ankara; Writing by Daren Butler; Editing by Gareth Jones and Peter Cooney)
Investigation finds Suncor’s Colorado refinery meets environmental permits
By Liz Hampton
DENVER (Reuters) – A Colorado refinery owned by Canadian firm Suncor Energy Inc meets required environmental permits and is adequately funded, according to an investigation released on Monday into a series of emissions violations at the facility between 2017 and 2019.
The 98,000 barrel-per-day (bpd) refinery in the Denver suburb of Commerce City, Colorado, reached a $9-million settlement with the Colorado Department of Public Health and Environment (CDPHE) March 2020 to resolve air pollution violations that occurred since 2017. That settlement also addressed an incident in December 2019 that released refinery materials onto a nearby school.
As part of the settlement, Suncor was required to use a third party to conduct an independent investigation into the violations and spend up to $5 million to implement recommendations from the investigation.
Consulting firm Kearney’s investigation found the facility met environmental permit requirements, but also pinpointed areas for improvement, including personnel training and systems upgrades, some of which was already underway.
“We need to improve our performance and improve the trust people have in us,” Donald Austin, vice president of the Commerce City refinery said in an interview, adding that the refinery had already undertaken some of the recommendations from the investigation.
In mid-April, Suncor will begin a turnaround at the facility that includes an upgrade to a gasoline-producing fluid catalytic cracking unit (FCCU) at Plant 1 of the facility. That turnaround is anticipated to be complete in June 2021.
Suncor last year completed a similar upgrade of an automatic shutdown system for the FCCU at the refinery’s Plant 2.
By 2023, the company will also install an additional control unit, upgraded instrumentation, automated shutdown valves and new hydraulic pressure units in Plant 2.
Together, those upgrades will cost approximately $12 million, of which roughly $10 million is dedicated to Plant 2 upgrades, Suncor said on Monday.
(Reporting by Liz Hampton; Editing by Marguerita Choy)