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Bank of Canada raises interest rate again — but the pace of hikes may be slowing

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Canada’s central bank continued its campaign to wrestle high inflation into submission on Wednesday, raising its benchmark interest rate by 50 basis points to 3.75 per cent.

The Bank of Canada’s rate — officially known as the target for the overnight rate — is the amount that retail banks are charged for short-term loans.

But it filters down into the economy by influencing the rates that Canadians get from their own lenders on things like savings accounts and mortgages.

After slashing its lending rate to near zero early in the COVID-19 pandemic, the bank has raised its benchmark rate six times since March, as it scrambles to rein in inflation, which has run up to its highest level in decades.

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While the move will likely help bring down the cost of living in the long run by compelling Canadians to spend and borrow less, it will only increase the pain for consumers and businesses that are already feeling the pain of inflation and higher borrowing costs.

The bank was widely expected to raise its rate, as the country’s inflation rate is still more than twice as high as the range it likes to see. But the increase of 50 basis points is less than the 75 points that some economists and investors were anticipating.

 

How will this rate hike affect you?

 

On the streets of Toronto, Canadians told CBC News how the Bank of Canada’s decision to raise interest rates will impact their finances.

That could be a sign the central bank is nearing the end of its rate-hiking cycle, but in its statement, the bank made it clear that rates “will need to rise further.”

Karyne Charbonneau, executive director of economics at CIBC Capital Markets, said the bank’s decision to slow the pace of its rate increases means “we are getting closer to the end of the hiking cycle and … steps of 75 basis points are now behind us.”

But she thinks another half percentage point is likely coming, and “rates will have to stay at that level at least through the end of 2023 to help bring inflation back down to target.”

The goal of the bank’s rate hikes is to bring down demand for all kinds of goods and services that have seen a surge in recent months. The most direct impact of the increases so far has been on the mortgage market, where the price to borrow money has roughly tripled since February.

Generally speaking, a 50-point hike in the bank’s rate, such as the one announced on Wednesday, will add about $30 per month to every variable rate loan, for every $100,000 owed. As an example, a borrower who was paying 4.25 per cent on a standard $400,000 mortgage will see their monthly payment go from $2,159 before to $2,270 after, which works out to an extra $1,300 a year — and that’s on top of the five previous rate hikes this year.

Ahmad Syed and his wife, Hira Ahmad, recently purchased a home in Elmsdale, N.S. They were pre-approved for a variable rate mortgage in February and took possession in June, and say the speed at which the numbers have changed in six short months has taken their breath away.

Ahmad Syed, left, and his wife, Hira Ahmad, who recently purchased a home in Nova Scotia, say they’re shocked at the pace of increases to their mortgage rate. (Eric Woolliscroft/CBC)

Their home loan now costs them an extra $1,000 more every month than they had planned. And while they are keeping their heads above water for now, they’ve had to cut their other spending categories down to nothing, cancelling plans for a new car and rethinking travel plans.

“I’m not sure how the average Canadian is going to pay their mortgage now because if it keeps increasing like this, it will be very difficult,” Syed said.

They feel like innocent victims of the central bank’s fight against inflation. “Who is responsible for the inflation in the first place?” Ahmad asked. “Why should I be paying for all these mistakes? The Bank of Canada is punishing us for something that we didn’t do.”

Rate hike won’t help combat food inflation

Food prices have been a major source of pain for consumers of late, with grocery prices increasing at a pace of more than 11 per cent in the last year, according to the latest Statistics Canada numbers.

Many, including federal NDP Leader Jagmeet Singh, have put the blame for high food prices at the feet of corporate profiteering, using the term “greedflation” in a series of social media posts.

Derek Holt, vice-president and head of capital markets economics at Scotiabank, said that argument doesn’t add up, since food prices are up by far more in other countries than they are in Canada. “I know that food prices are high and rising and this is causing pain, but there are important macro drivers to consider that don’t make it quite as simple as playing the blame game and bashing corporations,” he said.

 

Interest rate hike less than expected but still ‘significant,’ says economist

Derek Burleton, chief economist for TD Bank, reacts to the Bank of Canada’s 50-basis-point interest rate increase and how high he anticipates it may go.

CBC News asked the central bank why Canadians should expect this rate hike to bring down food prices when the previous ones offered little relief in the grocery aisle, and senior deputy governor Carolyn Rogers said the bank is keeping a close eye on what extent food companies will pass on the cost savings they are starting to see in their supply chain.

“Our goal of getting the excess demand out of the economy … will help to restore the competitive pressure and will prevent retailers from from just passing through all the costs,” she said. “[It] will bring the competition back. That’ll put downward pressure on prices.”

‘No easy outs’

Bank officials made it clear in a press conference following the decision that they are trying to find a balance between doing too much versus too little to fight inflation. They acknowledged the task will be a difficult and possibly painful one.

“There are no easy outs to restoring price stability,” Bank of Canada governor Tiff Macklem said. “If we don’t do enough, Canadians will continue to endure the hardship of high inflation. And they will come to expect persistently high inflation, which will require much higher interest rates and potentially a severe recession to control inflation,” he said.

“Nobody wants that.”

Jimmy Jean, chief economist and strategist at Desjardins, said he expects the central bank to raise its benchmark rate again at its next policy meeting in December, but he’d be surprised if there are more beyond that.

“Right now, with inflation having peaked, it is … time to really hit the pause button and really be open to the possibility of having to roll back some of those hikes in 2023, if inflation moderates faster than expected or we see a recession that is perhaps more severe than we hoped for,” he told CBC News in an interview.

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Black Friday sales: Smaller crowds of shoppers reported in Toronto as deals spread over weeks – CP24

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Brett Bundale, The Canadian Press


Published Friday, November 25, 2022 9:20AM EST


Last Updated Friday, November 25, 2022 2:40PM EST

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Canadians hunting for Black Friday deals did so without facing long lines or crowded shopping malls this year, as an extended period of sales and decades-high inflation weighs on consumers and prompts some to rein in spending.

Retailers have stretched deals over several weeks and offered similar discounts online, taking some of the frenzy out of the holiday shopping event.

Several big box stores in the Greater Toronto Area, such as Best Buy and Walmart, lacked the usual early morning lineups that once epitomized Black Friday.

The Eaton Centre in the heart of Toronto appeared busy around lunchtime, but closer to a typical Friday rather than swarming with the crowds and queues seen in previous years. Few stores appeared to have lines of waiting customers.

A busy stretch of the city’s Queen Street West, which includes H&M, Zara, Aritzia and Aldo stores, similarly didn’t show signs of additional shoppers.

“We’re seeing a dilution of Black Friday as a physical shopping event where you go to the store early in the morning,” retail analyst Bruce Winder said Friday.

“It’s finally sort of hit that tipping point where it’s much less about the day and it’s more about the shopping period.”

The elongation of Black Friday sales has lessened the urgency for consumers to shop on one particular day, said Lisa Hutcheson, managing partner at consulting firm J.C. Williams Group.

“The need to line up isn’t as necessary,” she said Friday. “Most of the retailers have been on sale a good portion of the week already.”

Shopper Amanda Ram said she normally comes to the Eaton Centre to check out Black Friday deals, though COVID-19 put a pause on that.

She said she normally tries to hit the mall before the after-work rush, but though it was busy she still noticed it wasn’t as packed as she remembered from before the pandemic – fewer and shorter lines, for one.

Overall Black Friday sales are expected to be strong as inflation intensifies the hunt for deals, experts say.

Yet the rising cost of living will also lead customers to “cherry pick” sales, Winder said.

Ram said she’s being more careful with her money as she shops for the holidays this year. With inflation driving up the price of her mortgage and everyday essentials, she feels less likely to get caught up in the allure of a great deal, and plans to do some online comparison at home before heading back to the mall.

She said she thinks inflation is definitely affecting how many people shop this weekend and heading into the holidays.

“It’s got to be on people’s minds.”

Stores that offer blowout deals of up to 70 per cent off will be busy while retailers with more tepid discounts won’t see the same traffic online or in stores, Winder said.

“If you’re a retailer and you’re trying to move something at 25 or 30 per cent off – it ain’t gonna sell,” he said.

Some retailers, especially those with high levels of inventory such as apparel, will likely offer bigger sales in stores than online.

“If the merchandise is already there and they’re running short on space, they’ll want to turn it into cash – especially if they don’t have room to pack it up and hold it for another year,” Winder said.

Meanwhile, after years of pandemic health restrictions, shopping in brick-and-mortar stores is expected to make a comeback this holiday season, including on Black Friday.

“We continue to see increased levels and excitement for in-person shopping across all our 18 shopping centres,” Sal Iacono, executive vice-president of operations for Cadillac Fairview, said in an emailed statement.

The company, which operates a number of malls across the country including the Eaton Centre in Toronto and the Pacific Centre in Vancouver, has seen retailers extend promotions over a longer period of time but still expects Black Friday to be a big shopping day, he said.

“We anticipate Black Friday to be one of the busiest shopping days at all our retail centres and we are looking forward to continuing to see the prolonged momentum throughout the entire season,” Iacono said.

Still, while some Canadians are eager to return to in-person shopping, others now prefer to do their holiday gift-buying online.

Bradley Thompson of Oakville, Ont., said he plans to do all his Christmas shopping on Black Friday – but won’t be stepping foot in a store.

“I’m not a big in-store shopper. I’m a real millennial in the sense that I’ll be doing all my shopping online,” he said.

“As a personal challenge, I try to get all of my Christmas shopping done during the Black Friday sales.”

He usually checks the sales at the big players like Amazon, Walmart and Best Buy, but Thompson said he’s increasingly also shopping at Etsy and smaller local businesses online.

Overall, he said the Black Friday deals he’s come across are good – but not great.

“The discounts don’t seem to be quite as steep as they used to be but they run them a little bit longer,” Thompson said.

“Inflation is crazy right now though, so every little bit I can save helps.”

– With files from Rosa Saba in Toronto.

This report by The Canadian Press was first published Nov. 25, 2022.

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Elon Musk says Twitter's verified service with colors to start next week – Yahoo Canada Finance

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(Reuters) -Twitter Inc is planning to roll out its verified service next Friday with different colored checks for individuals, companies and governments, after a botched initial launch led to a surge in users impersonating celebrities and brands on the platform.

Chief Executive Elon Musk on Friday allotted colors for the categories – gold for companies, grey for governments and a blue check for individuals including celebrities.

“Painful, but necessary,” he said, adding that verified accounts will be manually authenticated before a check is activated.

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The revamped $8-per-month service will allow individuals to have a smaller, secondary logo of their organizations if verified by them, he said in another tweet on Friday. “Longer explanation next week.”

The social media platform on Monday delayed its relaunch to make it foolproof as the service is expected to help Twitter grow revenue at a time when Musk is trying to retain advertisers after buying the company last month for $44 billion.

The subscription service, which was termed by Musk as a “great leveler”, was paused on Nov. 11 as fake accounts mushroomed, forcing the world’s richest man to bring back the “official” badge to some users.

For instance, one user pretending to be drugmaker Eli Lilly and Co had tweeted that insulin would be free, setting off a drop in the company’s shares and forcing it to issue an apology.

The turmoil led several companies including General Motors and United Airlines to pause or pull back ads on the platform. User growth on Twitter, however, is at an all-time high, according to Musk.

(Reporting by Akanksha Khushi and Aditya Soni in Bengaluru; Editing by Saumyadeb Chakrabarty and Arun koyyur)

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Motorcycle helmets bought from online platforms had counterfeit safety certifications, test finds – CBC News

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Experts are warning consumers to think carefully before purchasing safety equipment online, especially when it comes to protecting their heads.

A CBC Marketplace investigation has found that some motorcycle helmets purchased on popular websites would crack and fall apart in a crash — and that the safety certifications on them are counterfeit.

Marketplace purchased helmets for sale on Amazon, eBay and Walmart’s marketplace advertised as U.S. Department of Transportation (DOT) certified. Manufacturers, who are responsible for conducting testing, include the letters “DOT” on the back of a helmet to indicate the helmet has met or exceeded the U.S. Federal Motor Vehicle Safety Standard. It’s one of the three required safety certifications for motorcycle helmets in Canada. 

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But despite advertising that the helmets were safety certified, Marketplace found that each helmet failed portions of the safety standard, which, according to experts, means the DOT certifications were counterfeit.

Chris Withnall, senior engineer with Biokinetics lab in Ottawa, which tested the helmets, said it can be “a matter of life and death.”

“A helmet might look like a motorcycle helmet, but it might not actually behave like a motorcycle helmet when you need it most,” he said.

This helmet, purchased from a third-party seller on Walmart.ca, failed to prevent a striker from contacting a testing headform. (Southern Impact Research Centre)

After Marketplace told Amazon, eBay and Walmart about the helmets’ counterfeit safety certifications, all platforms removed the listings the show had identified.

In an emailed statement, a spokesperson for eBay wrote that it invests millions of dollars into keeping its platform safe. A spokesperson for Amazon wrote that its partners are “contractually obligated to ensure that their products comply with all applicable laws and Amazon policies,” and it urged concerned consumers to contact its customer service team. A spokesperson for Walmart wrote that the sellers are responsible for “ensuring their products meet all legal and regulatory requirements.” 

Marketplace also asked the U.S. Department of Transportation’s National Highway Traffic Safety Administration to respond to the investigation. In an email, the agency wrote that it relies on a self-certification process and will sometimes conduct random tests on some helmets, but it does take feedback and complaints from consumers into account. It also said it will recall helmets if necessary and acknowledged there are retailers that use fake DOT labels. 

When shopping for helmets, Milan Uzelac, a senior motorcycle instructor with the Rider Training Institute, urges riders to stick with reputable brands and try helmets on in-person. 

“If and when things happen, you want to be confident that the helmet you’re wearing is going to protect you,” he said. 

Watch the full Marketplace investigation to see exactly how each helmet failed the testing, and for tips on red flags to look for when shopping for helmets.

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