The Bank of Canada raised its benchmark interest rate to 1.5 per cent on Wednesday and signalled that more hikes are on the way.
The decision by the central bank to raise its rate by half a percentage point was widely expected as it moves to aggressively rein in high inflation.
Inflation hit 6.8 per cent in April, more than twice the level that the central bank likes to see.
In a vacuum, central banks slash interest rates to encourage borrowing and investing to stimulate a sluggish economy, and they raise rates when they want to cool down an overheated economy.
Just as many other countries did, Canada reduced lending rates in the early days of the COVID-19 pandemic. But those record-low borrowing rates have contributed to rising inflation, which is what’s prompting the central bank to change direction.
While the cost of living is already at its highest rate in 30 years, the central bank says it doesn’t think things have peaked just yet, saying in a statement on Wednesday that inflation “will likely move even higher in the near term before beginning to ease.”
The hike brings the bank’s rate within a quarter of a point of the 1.75 per cent level it was at before the pandemic, and the bank made it clear in its statement that several more rate increases are planned.
“With … inflation persisting well above target and expected to move higher in the near term, the [bank] continues to judge that interest rates will need to rise further,” the central bank said in a statement.
The bank’s decision will increase borrowing rates for variable rate loans such as mortgages and other lines of credit.
That’s going to impact people like John Marsh, the owner and operator of Elecompack Systems Inc., an office supply store and label maker based in Oakville, Ont.
When the pandemic hit, Marsh said, he saw his sales plunge by about 40 per cent, so like many business owners, he borrowed some money to stay afloat to ride out the storm. While he’s pleased his business is now turning a profit again, this week’s rate hike will stretch his budget even further.
“I have several loans with a variable rate, and every time the rate changes, it has an impact on us,” he told CBC News in an interview.
Marsh estimates that Wednesday’s 50-point hike will probably raise his debt payments by a few hundred dollars a month. “It’s going to be at least six years before we recover fully,” he said. “Anything right now that makes it harder to recover is not a good thing.”
Impact on housing market
While consumers and businesses with variable rate debt will feel the higher rates, the biggest impact will likely be on Canada’s housing market.
Cheap lending rates fuelled a breathtaking rise in Canada’s housing market during the pandemic, but the wind appears to be coming out of its sails of late as the central bank signals the era of cheap money is coming to an end.
The national average house price has fallen for two months in a row and is expected to fall further. While that’s obviously concerning for sellers and potentially good news for buyers, Toronto mortgage broker Samantha Brookes said absolutely everyone will be impacted by this week’s rate hike, no matter what part of the market they are in.
While lower prices may help buyers, many are finding that their mortgage will cost more than they expected, she told CBC News in an interview.
“These low rates are now gone, they’re totally off the table,” Brookes, the CEO of Mortgages of Canada, said, “and people just have to be more aware of how much this is going to increase their cost per month.”
Similarly, owners who had banked on a king’s ransom when selling their home are having to adjust their expectations downward, but even those with no plans to sell are feeling the pinch.
Brookes gives the example of owners who bought years ago when mortgage rates of one or two per cent were easy to find. Today, those owners’ mortgages are up for renewal, “and the interest rates are in the four per cent range, [so] they can no longer afford the mortgage,” she said.
Those owners are finding themselves having to stretch their mortgages over a longer time period to bring the monthly payment down to something they can afford. While the process of adjusting to higher rates will be painful, Brookes said it will be good for everyone in the long run.
“It’s time for us to start bringing those rates back to where they used to be,” she said.
Canada first to sign off on Finland, Sweden joining NATO – CTV News
Canada became the first country to ratify Finland and Sweden’s accession protocols to join the North Atlantic Treaty Organization (NATO), Prime Minister Justin Trudeau announced Tuesday.
The move follows NATO leaders officially inviting the two nations to join the alliance during a summit in Madrid last week, and brings the two countries a step closer to becoming full NATO members.
“Canada has full confidence in Finland and Sweden’s ability to integrate quickly and effectively into NATO and contribute to the Alliance’s collective defence,” Trudeau said in a statement.
“Their membership will make NATO stronger and we call on all NATO members to move swiftly to complete their ratification processes to limit opportunities for interference by adversaries.”
According to The Associated Press, all 30 NATO allies signed off on the accession protocols on Tuesday, sending the membership bids to each nation for legislative approval. Both Canada and Denmark were quick to turn around their ratification documents.
“Thank You Canada! Canada is the first country to deliver its instrument of ratification to the United States Department of State, the depository of the North Atlantic Treaty!” tweeted Sweden’s Ambassador to Canada Urban Ahlin.
In Canada, the federal government made moves domestically to move through the ratification quickly, Trudeau said. This included issuing orders-in-council authorizing Foreign Affairs Minister Melanie Joly to “take the actions necessary to ratify, on behalf of Canada.”
Ahead of Parliament adjourning for the summer, the House of Commons debated and voted on a motion signalling their support for Finland and Sweden joining NATO.
In May, the House Public Safety and National Security Committee adopted a motion expressing “strong support” for the two Scandanavian countries’ membership in the alliance. The motion also called on all NATO members to approve their applications as quickly as possible.
A debate was held on this motion on June 1, and it passed unanimously when put to a vote the following day.
“Russia’s war in Ukraine has actualized something that was once only theoretical. An authoritarian state led by an autocrat has attacked a democracy: It has demonstrated that it is willing and able to attack a democracy. It has made clear that democracies that stand alone and are not part of military alliances are most vulnerable,” said Conservative MP and foreign affairs critic Michael Chong during the House debate. “That is why it has become necessary to bring both Sweden and Finland into the NATO alliance. This is an urgent matter.”
Also taking part in the debate, NDP MP and foreign affairs critic Heather McPherson said she supports Finland and Sweden doing all they can to prevent their countries from being threatened further by Russia.
“Prior to the further invasion of Ukraine, support for NATO membership was around 20 to 30 per cent in Sweden and Finland. Now, 76 per cent of Finnish people support joining NATO. Very simply, Vladimir Putin and the aggression of the Russian Federation are responsible for escalating tensions in the region and leading Sweden and Finland to seek NATO membership,” McPherson said.
With NATO member countries having different processes for completing ratification, it could be some time still before the two nations formally become a part of the longstanding intergovernmental military alliance.
With files from Senior Political Correspondent for CTV News Channel Mike Le Couteur
Canada Day Ottawa: 12 arrested, 50 charges laid – CTV News Ottawa
Ottawa police say 50 criminal charges were laid over the Canada Day long weekend and 12 people were arrested.
Last Friday marked the first Canada Day in Ottawa with major in-person events since 2019. Thousands of tourists and residents came downtown to celebrate the holiday. In the mix were several hundred protesters associated with the “Freedom Convoy” movement that paralyzed downtown Ottawa in February.
Ottawa police were out in force starting June 29 with the implementation of the downtown vehicle control zone, which was meant to prevent another vehicle-based occupation of the city.
Police said they arrested a dozen people in downtown Ottawa between June 29 and July 3, including people who were not involved in Canada Day events or protests. On top of the 50 criminal charges, four charges under the Controlled Drugs and Substances Act were also laid.
One man was arrested on Parliament Hill June 29 for causing a disturbance. He was taken back to Toronto on an outstanding warrant.
On June 30, police charged one person with breach of release orders and Highway Traffic Act offences after a traffic stop on Highway 417 at Anderson Road.
Later that day, three people were arrested following an incident at the National War Memorial in which a police officer was allegedly choked. Charges include assaulting police, resisting arrest, causing a disturbance, and assault by choking. This incident came shortly after Canadian soldier James Topp, who is facing a court martial for criticizing the government’s COVID-19 vaccine rules in uniform, completed his cross-country walk protesting vaccine mandates. Hundreds of people had gathered at the War Memorial to hear Topp speak.
On Canada Day, one man was arrested and charged for allegedly pulling a knife on RCMP officers near LeBreton Flats after officers broke up a fight. Two more people were arrested and face several assault charges after an attack in the ByWard Market.
On July 2, police arrested two people in a vehicle and seized a handgun. Several gun and drug charges were laid. Patrol officers also seized a gun in Sandy Hill that afternoon and charged a man with drug and gun offences.
On July 3, police arrested a woman for public intoxication who allegedly spit in an officer’s face. She now also faces an assault charge.
Ottawa police did not name any of the accused.
Police are also investigating paint on public property in Strathcona Park and on Wellington Street. Protesters painted messages about convoy organizers Pat King and Tamara Lich on Wellington Street on Canada Day. Police also said earlier they laid 19 impaired driving charges over the long weekend.
Ottawa Bylaw towed 121 vehicles from the vehicle control zone between June 29 and July 3 and issued 513 parking tickets.
Foreign Affairs Minister Mélanie Joly to take part in G20 despite Russia’s presence
OTTAWA — Canada’s Foreign Affairs Minister Mélanie Joly will take part in a G20 meeting in Bali, Indonesia, this week, even though Russia’s Foreign Minister Sergey Lavrov is also expected to attend.
In March, Joly joined many others in walking out of a United Nations meeting in Geneva when Lavrov, whom Canada had brought sanctions against days earlier, began speaking.
In April, Deputy Prime Minister Chrystia Freeland joined a walkout of a G20 meeting for finance ministers and central bank governors in Washington to protest Russia’s invasion of Ukraine.
In May, International Trade Minister Mary Ng joined her counterparts from the United States, Australia, Japan and New Zealand in leaving an APEC meeting in Bangkok when the Russian representative began to speak.
Last week, Prime Minister Justin Trudeau said Canada would take part in the G20 leaders’ meeting in November, even if President Vladimir Putin goes too, saying it is important to counteract the voice that Russia will have at that table.
Joly, who recently said it was unacceptable for a Canadian official to attend a reception hosted by the Russian Embassy in Ottawa, is expected to join other foreign ministers at the G20 meeting in opposing the ongoing war in Ukraine.
This report by The Canadian Press was first published July 5, 2022.
The Canadian Press
Is Canada heading for a recession? – CBC News
BOE's Cunliffe Says Economy Is Slowing Due to Spending Squeeze – Bloomberg
Westmount Mall to open COVID-19 vaccination clinic for month of July – CTV News London
Silver investment demand jumped 12% in 2019
Europe kicks off vaccination programs | All media content | DW | 27.12.2020 – Deutsche Welle
Global Media Markets, 2015-2020, 2020-2025F, 2030F – TV and Radio Broadcasting, Film and Music, Information Services, Web Content, Search Portals And Social Media, Print Media, & Cable – GlobeNewswire
Health14 hours ago
Pharmacists in London, Ont., hope medication shortage is resolved before cold and flu season – CBC.ca
Sports13 hours ago
Ailing Nick Kyrgios prevails at Wimbledon, advancing to 3rd career Slam quarter-final – CBC Sports
Sports14 hours ago
Argos miss tying convert as Bombers escape with win – TSN
Tech19 hours ago
UM Today | Information Services and Technology | Approvals app in Microsoft 365 Teams – UM Today
Art5 hours ago
New interactive art installation in front of Ackland Art Museum engages community – The Daily Tar Heel
Tech18 hours ago
OnePlus could take the Poco approach, make Nord an independent brand – Android Authority
Tech5 hours ago
Xiaomi 12S debuts Leica partnership and 1-inch camera sensor, but won’t launch outside of China – 9to5Google
Sports15 hours ago
Blue Jays continue grieving with Budzinski family amid non-stop baseball schedule – Sportsnet.ca