The Bank of Canada is widely expected to raise its trend-setting interest rate this week by a quarter of a percentage point, which would bring it to 4.5 per cent.
If it happens, it’ll be the eighth time in a row that the bank has opted to hike its benchmark rate, which makes borrowing money more expensive for consumers and businesses.
But for the first time in almost a year, there isn’t a solid consensus among those who watch the central bank that another hike is in the cards — or even whether one should be.
The bank is locked in a battle to wrestle inflation into submission, and it believes rate hikes are the best weapon at its disposal to win that war.
Even so, the rate hikes have so far only succeeded in bringing inflation down from a 40-year high above eight per cent last summer to 6.3 per cent last month.
That’s still twice as high as the upper limit of the range the bank likes to see, which is why a majority of economists think another hike is in the offing. But Pablo Villanueva, an economist with Swiss Bank UBS is among those who thinks the best thing the Bank of Canada could do might just be nothing at all.
“The data since December has shown an economy that is weakening,” he said, noting that Canada’s GDP likely only grew by about one per cent in the fourth quarter of 2022. That’s well down from the three per cent average for the rest of the year. Wage gains and the employment numbers paint a similar picture.
Villaneuva says the recent data points on Canada’s GDP and the recent surge of layoffs add up to make a pretty compelling case to stand on the sidelines for a while.
“We think that this weaker outlook for the economy and inflation should give the Bank of Canada confidence that it can hold off on further hikes at least in the near term,” he said.
A major reason to stand pat is that it typically takes between six months to a year and a half for the full impact of rate hikes to be felt anyway.
“We recognize that we have raised interest rates rapidly and that their effects are working their way through the economy,” Sharon Kozicki, deputy governor of the Bank of Canada, told a Montreal business audience last month.
“In other words, we are moving from how much to raise interest rates to whether to raise interest rates,” she said.
Karyne Charbonneau, an economist with CIBC, thinks the bank is likely to raise again on Wednesday, but she’s among those who thinks there probably isn’t another hike coming after that.
“If central banks are wise enough to recognize the lagged impacts of what they’ve already done, they won’t have that many more rate hikes to deliver,” she said.
The case for standing pat
While the headline inflation number continues to go up at an eye-watering pace, beneath the surface it’s not hard to find goods and services that are actually cheaper now than they used to be.
Almost two dozen of the 300-odd subcategories that Statistics Canada tracks are now in negative territory for the year, including books, computer and digital equipment, children’s clothes and shoes.
Slightly cheaper medicine and parking fees may be cold comfort to anyone who tried to fill up a gas tank lately — or a grocery cart. But as demand wanes for goods and services, more and more items will move into that negative range, dragging the overall inflation rate down with them.
So if the bank is looking for excuses to take a pause, it’s not hard to find them.
Stephen Gordon, a professor of economics at l’Université Laval in Ste-Foy, Que., has been tracking the shorter term inflation trends for more than a year now online. He notes that the annualized inflation rate over the past three months is now down to below four per cent. A year ago, it was more than three times that.
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Investors, too, seem less confident than they’ve been all year that the bank is poised to hike again. Trading in investments known as swaps on Monday imply the market thinks there’s about a three-in-four chance of a hike on Wednesday — but that means there’s a one-in-four chance that there won’t be one.
That’s the first time that figure has been anything less than a sure thing since the bank started hiking last February, and a sign that investors are betting real dollars that winds of monetary policy could be blowing in a different direction soon.
Regardless of what happens this week Gordon says the real test for inflation will be in the February numbers, since that will be one year since Russia invaded Ukraine, which kicked already-underway inflation into high gear.
“I can see a case for giving a pause,” he said in an interview with CBC News on Monday. “But we’re still in wait and see mode about the data.”
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.
