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Bank of Canada raises its key interest rate to 5% – CBC.ca

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The Bank of Canada raised its benchmark interest rate by 25 basis points on Wednesday, marking the first time since April 2001 that the figure hit five per cent.

The move was expected by economists after Statistics Canada released its June labour force survey last week showing that Canada added 60,000 jobs last month — further contributing to an overheated economy.

Some of the country’s biggest lenders, including the Royal Bank of Canada, CIBC, Bank of Montreal and TD Bank, have already announced that they will match their increase effective Thursday to align with that of the central bank’s.

Following the announcement, experts diverged on whether Canadians could expect another increase after the summer. Trading in investments known as swaps — which bet on future central bank moves — imply there is a better than 75 per cent chance of another small hike at the bank’s next meeting on Sept. 6.

The effects of interest rate hikes can sometimes take a year or a year-and-a-half to play out in the economy.

“There’s an element of patience, and I think that’s why as well you see [the bank] being as noncommittal as they were today, with respect to whether they will be performing more hikes,” Desjardins chief economist Jimmy Jean told CBC News in an interview.

“They’re trying their best to communicate something to Canadians that can provide them with some sense of clarity. But the problem is that they don’t have that clarity themselves.”

Could be mid-2025 before bank hits inflation target

Wednesday’s rate hike marks the 10th by the central bank since March 2022. It hit pause on those hikes in January for a few months to determine whether the economy had sufficiently cooled, then resumed its campaign in June.

“Global inflation is easing, with lower energy prices and a decline in goods price inflation. However, robust demand and tight labour markets are causing persistent inflationary pressures in services,” the bank wrote in a release.

WATCH | ‘Monetary policy is working’: 

Interest rates are up again: What’s the Bank of Canada saying?

6 hours ago

Duration 1:31

Bank of Canada governor Tiff Macklem says ‘monetary policy is working — but underlying inflationary pressures are proving more stubborn.’

During a mid-morning news conference on Wednesday, Bank of Canada governor Tiff Macklem said the bank expects inflation to ease but that it could take until the middle of 2025 to hit its two per cent target.

That’s six months later than was forecast in April.

“We’ve been clear about the indicators we are watching, and it’s clearly too early to be talking about interest rate cuts,” Macklem said, adding it’s also too soon to tell how much impact the rate increases are having.

“We are certainly trying to balance the risks of over- and under-tightening, and we’ll be taking it one meeting at a time.”


The bank’s Monetary Policy Report noted that the bank would raise its rates because of persistent “excess demand.”

Canada’s population surpassed 40 million people last month and is growing at its highest annual rate since 1957. Population growth is a key factor contributing to job growth, consumer spending on goods and services, and housing demand. 

The inflation rate slowed to 3.4 per cent in the year up to May, down from 8.1 per cent last summer, as the central bank’s efforts to rein in the number paid off. But rising food prices were still outpacing inflation — an ongoing trend since late 2021.

‘I’ve thought about selling’

With Wednesday’s rate hike, a typical mortgage holder can expect to pay more on their variable rate loan, starting on Thursday.

A homeowner with a $500,000, 25-year variable rate loan at a rate of 5.8 per cent on Tuesday would have been paying $2,512 a month. After Wednesday’s hike, their rate is likely to jump to 6.05 per cent, which will bump their monthly payment up to $2,571 a month. That’s an increase of more than $700 a year.

Exact numbers will depend on the specifics of the loan, but on average, mortgage analytics site RateHub.ca says mortgage holders can expect to pay $100 more per month on their mortgage after Wednesday’s hike.

Leena Chandi, a single mother of three who purchased her Surrey, B.C., townhouse seven years ago, said she would lay down and cry if another hike were announced, as it was on Wednesday.

Leena Chandi, a single mother of three, purchased her Surrey, B.C., townhouse seven years ago. She’s watched her variable mortgage rate double since the Bank of Canada began its aggressive campaign to cool inflation. (Martin Diotte/CBC)

Having started on a fixed mortgage, she switched to a new bank and took on a variable rate about a year-and-a-half ago — before the Bank of Canada began its quest to tame an overheated economy with a series of interest rate hikes.

“All of a sudden, boom. The first increase happened and I was like, ‘OK, well, whatever, you know, that’s fine, I can handle it,” Chandi told CBC News.

“And then the second increase happened and then the third increase happened, and then the fourth and then the fifth, and now my mortgage payment is doubled.”

WATCH | Canadians say they’re feeling the squeeze of rate hikes: 

British Columbians say they’re feeling squeezed as interest rate hiked again

5 hours ago

Duration 0:46

The Bank of Canada has raised its benchmark interest rate for the 10th time since March 2022, increasing pressure on homeowners with variable mortgages and those looking to enter the housing market.

Chandi said her biweekly payments increased from $800 to $1,300 during that period.

“I’ve thought about selling. I really have because … my townhouse is now probably worth three times, almost 2½ times what I paid for it. But where am I gonna go?”

Mortgage rates driving inflation

Clément Bonnal, a Quebec City resident who bought his house in 2021, said his mortgage payments have increased by almost $700 per month. 

He said that a rate hike by the Bank of Canada is “nonsense” to him, as rising mortgage costs are now driving inflation, having climbed by 30 per cent in Statistics Canada data from June.

Bonnal questioned why the bank would continue to raise interest rates when inflation is close to its target range — and given that the impact of rate hikes can sometimes take more than a year to appear in the economy.

“If they continue to increase the rates, it’s like a fireman that puts the fire in the forest,” Bonnal told CBC News.

Carolyn Rogers, senior deputy governor of the Bank of Canada, said during the Wednesday news conference that while housing is sensitive to interest rates, housing demand is still outweighing supply and driving up prices.

“We target inflation,” she said. “We don’t target house prices, and we don’t target any one sector or one item within the [consumer price index] basket.”

WATCH | ‘We don’t target house prices’: 

Bank of Canada: ‘We target inflation, we don’t target house prices’

6 hours ago

Duration 1:07

Carolyn Rogers, senior deputy Bank of Canada governor, says that while house prices are ‘very sensitive’ to interest rates, there are other issues to consider as well — including supply issues and increasing immigration levels.

For Chandi, the mother of three in B.C., it’s cold comfort as she considers the price of groceries and clothes, on top of paying her university-aged daughter’s rent and contributing to her children’s RESPs.

“Do they actually realize how much of an effect this is having on the average person?” she said.

“It just seems like we have no say. We’re just at the mercy of the Bank of Canada right now.”

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NASA astronauts won’t say which one of them got sick after almost eight months in space

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CAPE CANAVERAL, Fla. (AP) — Three NASA astronauts whose prolonged space station mission ended with a trip to the hospital last month declined to say Friday which one of them was sick.

Astronauts Matthew Dominick, Michael Barratt and Jeanette Epps publicly discussed their spaceflight for the first time since returning from the International Space Station on Oct. 25. They spent nearly eight months in orbit, longer than expected because of all the trouble with Boeing’s Starliner crew capsule and rough weather, including Hurricane Milton.

Soon after their SpaceX capsule splashed down in the Gulf of Mexico off the Florida coast, the three were taken to a hospital in nearby Pensacola along with Russian cosmonaut Alexander Grebenkin, who launched with them back in March.

One of the Americans ended up spending the night there for an undisclosed “medical issue.” NASA declined to say who was hospitalized or why, citing medical privacy.

When asked at Friday’s news conference which one had been sick, the astronauts refused to comment. Barratt, a doctor who specializes in space medicine, declined to even describe the symptoms that the unidentified astronaut had.

“Spaceflight is still something we don’t fully understand. We’re finding things that we don’t expect sometimes. This was one of those times and we’re still piecing things together on this,” said Barratt, the only member of the crew who had flown in space before.

Epps said everyone is different in how they respond to space — and gravity.

“That’s the part that you can’t predict,” she said, adding, “Every day is better than the day before.”

Dominick said little things like sitting comfortably in a hard chair took several days to get used to once he returned. He said he didn’t use the treadmill at all during his time in space, as part of an experiment to see what equipment might be pared on a long trip to Mars. The first time he walked was when he got out of the capsule.

The two astronauts who served as test pilots for Boeing’s Starliner — Butch Wilmore and Suni Williams — will remain at the space station until February, flying back with SpaceX. Starliner returned empty in September.

___

The Associated Press Health and Science Department receives support from the Howard Hughes Medical Institute’s Science and Educational Media Group. The AP is solely responsible for all content.

The Canadian Press. All rights reserved.



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43 monkeys remain on the run from South Carolina lab. CEO thinks they’re having an adventure

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COLUMBIA, S.C. (AP) — Forty-three monkeys bred for medical research that escaped a compound in South Carolina have been spotted in the woods near the site and workers are using food to try to recapture them, authorities said Friday.

The Rhesus macaques made a break for it Wednesday after an employee at the Alpha Genesis facility in Yemassee didn’t fully lock a door as she fed and checked on them, officials said.

“They are very social monkeys and they travel in groups, so when the first couple go out the door the others tend to just follow right along,” Alpha Genesis CEO Greg Westergaard told CBS News.

Westergaard said his main goal is to have the monkeys returned safely with no other problems. “I think they are having an adventure,” he said.

The monkeys on Friday were exploring the outer fence of the Alpha Genesis compound and are cooing at the monkeys inside, police said in a statement.

“The primates are exhibiting calm and playful behavior, which is a positive indication,” the police statement said, adding company workers are closely watching the monkeys while keeping their distance as they work to safely recapture them.

The monkeys are about the size of a cat. They are all females weighing about 7 pounds (3 kilograms).

Alpha Genesis, federal health officials and police all said the monkeys pose no risk to public health. The facility breeds the monkeys to sell to medical and other researchers.

“They are not infected with any disease whatsoever. They are harmless and a little skittish,” Yemassee Police Chief Gregory Alexander said Thursday.

Authorities still recommend that people who live near the compound about 1 mile (1.6 kilometers) from downtown Yemassee shut their windows and doors and call 911 if they see the monkeys. Approaching them could make them more skittish and harder to capture, officials said.

Eve Cooper, a biology professor at the University of Colorado Boulder who has studied rhesus macaques, said the animals have the potential to be dangerous and urged people to keep their distance.

Rhesus macaques monkeys can be aggressive. And some carry the herpes B virus, which can be fatal to humans, Cooper said.

However, Alpha Genesis states on its website that it specializes in pathogen-free primates. Cooper noted that there are pathogen-free populations of rhesus macaques that have been quarantined and tested.

“I would give them a wide berth,” Cooper said. “They’re unpredictable animals. And they can behave quite aggressively when they’re afraid.”

Alpha Genesis provides primates for research worldwide at its compound about 50 miles (80 kilometers) northeast of Savannah, Georgia, according to its website.

Locally, it is known as “the monkey farm.” And there is more amusement than panic around Yemassee and its population of about 1,100 just off Interstate 95 about 2 miles from Auldbrass Plantation, a Frank Lloyd Wright house designed in the 1930s.

There have been escapes before, but the monkeys haven’t caused problems, said William McCoy, who owns Lowcountry Horology, a clock and watch repair shop.

“They normally come home because that’s where the food is,” he said.

McCoy has lived in Yemassee for about two years and while he plans to stay away from the monkeys, he has his own light-hearted plan to get them back.

“I’m stocking up bananas, maybe they’ll show up,” McCoy said.

The Alpha Genesis compound is regularly inspected by federal officials.

In 2018, the U.S. Department of Agriculture fined Alpha Genesis $12,600 in part after officials said 26 primates escaped from the Yemassee facility in 2014 and an additional 19 got out in 2016.

The company’s fine was also issued because of individual monkey escapes as well as the killing of one monkey by others when it was placed in the wrong social group, according to a report from the USDA.

The group Stop Animal Exploitation Now sent a letter Thursday to the USDA asking the agency to immediately send an inspector to the Alpha Genesis facility, conduct a thorough investigation and treat them as a repeated violator. The group was involved in the 2018 fine against the company.

“The clear carelessness which allowed these 40 monkeys to escape endangered not only the safety of the animals, but also put the residents of South Carolina at risk,” wrote Michael Budkie, executive director of the group.

The USDA, which has inspected the compound 10 times since 2020, didn’t immediately respond to the letter.

The facility’s most recent federal inspection in May showed there were about 6,700 primates on site and no issues.

In a 2022 review, federal veterinarians reported two animals died when their fingers were trapped in structures and they were exposed to harsh weather. They also found cages weren’t adequately secure. Inspectors said criminal charges, civil penalties or other sanctions could follow if the problems weren’t fixed.

Since then, Alpha Genesis has undergone six inspections with minor problems reported only once.

In January 2023, the USDA said temperatures were out of the 45 to 85 degree Fahrenheit (7.2 to 29.5 degree Celsius) required range at some of the compound’s monkey cages. The inspection found moldy food in one bin, sharp edges on a gate that could cut an animal and sludge, food waste, used medical supplies, mechanical equipment, and general construction debris on the grounds.

Supporters of medical research involving nonhuman primates said they are critical to lifesaving medical advances like creating vaccines against COVID-19 because of their similarities to people. Keeping a domestic supply of the animals is critical to prevent shortages for U.S. researchers.

Humans have been using the rhesus macaque for scientific research since the late 1800s. Scientists believe that rhesus macaques and humans split from a common ancestor about 25 million years ago and share about 93% of the same DNA.

These monkeys have been launched into space on V2 rockets, used for AIDS research, had their genome mapped and made stars of their own reality television show. They were in such high demand in the early 2000s that a shortage led to scientists paying up to $10,000 per animal.

Outside of rats and mice, rhesus macaques are one of the most studied animals on the planet, said Dario Maestripieri, a behavioral scientist at the University of Chicago who wrote the 2007 book “Macachiavellian Intelligence: How Rhesus Macaques and Humans Have Conquered the World.”

The animals are very family oriented, siding with relatives when fights break out. And they’re adept at building political alliances in the face of threats from other monkeys. But they can be painful to watch. Monkeys with lower status in the hierarchy live in a constant state of fear and intimidation, Maestripieri said.

“In some ways, they kind of represent some of the worst aspects of human nature,” Maestripieri said.

___

Lovan reported from Louisville, Kentucky, and Finley reported from Norfolk, Virginia.



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Freeland says she’s ready to deal with Trump |

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Finance Minister Chrystia Freeland speaks with reporters after chairing a special cabinet committee working on Canada’s plan to deal with the incoming Donald Trump administration. Freeland says she’s stood up for Canadian interests in the past and is ready to go another round. (Nov. 8, 2024)



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