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Bank of Canada raises key interest rate to 4.25 per cent, its highest since 2008

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The Bank of Canada has raised its overnight rate by 50 basis points to 4.25 per cent, marking its seventh rate hike in nine months. The last time the bank’s policy rate was this high was in January 2008.

The inflation rate remained high at 6.9 per cent in October, well above the bank’s 2 per cent target. Higher gas prices put upward pressure on the cost of most goods and services, according to the Consumer Price Index released by Statistics Canada last month.

The bank says the economy continued to operate in excess demand during the third quarter and the labour market in Canada remained tight. With unemployment remaining at historic lows, Statistics Canada reported average hourly wages rose by 5.6 per cent year-over-year in October.

The bank says tighter monetary policy is affecting domestic demand in the Canadian economy, with declines in the housing market and consumption moderating during the third quarter. Since its monetary report in October, the bank continues to expect economic growth to stall through the end of this year and into the first half of 2023.

“The November GDP data showed us that economic activity in Canada had already started to shrink,” said Sheila Block, senior economist with the Canadian Centre for Policy Alternatives. “Given that slowdown, any hopes for a soft landing have been crushed by today’s rate hikes.”

During a press conference following the bank’s last rate announcement on Oct. 27, Bank of Canada Governor Tiff Macklem signalled “the tightening phase will draw to a close, we are getting closer, but we aren’t there yet.”

On Wednesday, the bank did not rule out further rate increases to tackle inflation.

“Looking ahead, Governing Council will be considering whether the policy interest rate needs to rise further to bring supply and demand back into balance and return inflation to target,” reads the release.

However, experts think it will be difficult for the bank to raise rates during a period of low growth.

“It will be very hard for a central bank to raise interest rates when the economy is in a recession,” said Kevin Page, Institute of Fiscal Studies and Democracy President and CEO. “I think it is highly probable that the central bank will not need to raise interest rates in the short term (next three to six months).”

Speaking to reporters in Ottawa, Conservative Leader Pierre Poilievre blamed the cost of living crisis on the federal government’s increased spending during the pandemic.

“It’s another uppercut for Canadians,” said Poilievre. “It’s all because of the inflationary deficits and spending of Justin Trudeau.”

Meanwhile, NDP Leader Jagmeet Singh called for other measures to help combat inflation.

“The federal government has to do more to look at the solutions around inflation,” said Singh during a press conference in Ottawa. “Some of those solutions include acknowledging that high profits in the corporate sector — corporate greed — is contributing to the cost of living going up.”

In the House of Commons, Associate Minister of Finance Randy Boissonnault defended his government’s policies to address the increased cost of living.

“The bank is doing their job. We’re doing our job by making sure we have the fiscal fire power to face what’s going to come,” he said during Question Period. “We’re helping Canadians to buy a new home, we’re advancing the payments for worker benefits and we’re also making sure student loan interest gets removed forever.”

The next policy rate announcement is expected on Jan. 25, 2023.

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Demonstration outside Brampton Hindu temple broken up after weapons spotted: police

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A Hindu temple in Brampton, Ont., where violence erupted over the weekend was the site of another demonstration on Monday night that police broke up after they say weapons were spotted in the crowd.

Peel Regional Police said in social-media updates that the demonstration was declared an unlawful assembly shortly before 10 p.m., after officers saw weapons “within the demonstration.”

Police say the demonstration converged at an intersection outside the Hindu Sabha Mandir temple, shutting down traffic along Gore Road in both directions, before crowds dispersed by 1 a.m.

Pro-Hindu groups who shared details of Monday’s demonstration suggested it came in response to Sikh separatists who protested a visit by Indian consular officials to the temple on Sunday.

Three people were arrested and a Peel police officer was suspended after Sunday’s protest, with social-media videos seeming to show fist fights and people striking each other with poles on what appeared to be grounds of the temple.

In response to Monday’s demonstration, Brampton Mayor Patrick Brown shared a video of a man he accused of trying to “direct violence against those of Sikh faith.”

“Agitators trying to incite violence need to be dealt with promptly and swiftly with the full extent of our hate laws,” Brown said in a Tuesday morning post on X.

The Canadian Press has not independently verified the contents of the video posts on social media.

Before Monday’s demonstration, Indian Prime Minister Narendra Modi had condemned Sunday’s violence as a deliberate attack on a Hindu temple and an attempt to intimidate diplomats.

Canada expelled six Indian diplomats last month for allegations that they used their positions to collect information on Canadians in the Sikh separatist movement, and then passed the details on to criminal gangs who targeted the individuals directly.

India, which has rejected those allegations, has long accused Canada of harbouring terrorists involved in a Sikh separatist movement calling for an independent country called Khalistan. Canadian officials have said related extradition requests from India often lack adequate proof.

This report by The Canadian Press was first published Nov. 5, 2024.

The Canadian Press. All rights reserved.



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B.C. ports shuttered as lockout takes hold in latest labour dispute

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VANCOUVER – One of Canada’s most vital trade arteries is cut off as employers at most of British Columbia’s ports lock out their workers in a dispute involving about 700 unionized foremen.

The BC Maritime Employers Association says it defensively locked out members of the International Longshore and Warehouse Union Local 514 after the union began strike activity yesterday.

However, union president Frank Morena says the employers grossly overreacted to the union’s original plan for an overtime ban, adding that its negotiators are ready to re-engage in talks at any time.

Canadian political and business leaders have expressed concern with another work stoppage at the ports, after job action from the big railways earlier this year and a 13-day strike in a separate labour dispute last year.

The Greater Vancouver Board of Trade says it is relaunching its Port Shutdown Calculator, a tool to illustrate the economic damage caused by the labour dispute and introduced during the job action last year.

Board president Bridgitte Anderson says the latest port shutdown will disrupt $800 million worth of goods daily, with every hour of the closure fuelling inflation.

“This shutdown is the latest in a long line of highly damaging labour disputes that have hurt Canada’s economy and international reputation,” Anderson says.

“Through the Port Shutdown Calculator, we want to demonstrate the profound and escalating impact of this labour dispute.”

The employers and the workers represented by Local 514 have been without a contract since March 2023.

This report by The Canadian Press was first published Nov. 5, 2024.

The Canadian Press. All rights reserved.



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Canada Post, union, still disagree over weekend delivery following weekend talks

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Canada Post and the union representing its workers are commenting on how weekend talks for a new contract went, with the employer calling them less productive than they’d hoped and the union claiming their employer is focused on flexibility to deliver parcels at the lowest possible cost.

The Crown corporation says in a news release late Monday that neither side has provided the minimum 72-hour notice of their intent to start a labour disruption, but the Canadian Union of Postal Workers repeated a threat on its website that it “won’t shy away from taking the next step” if there is no real movement at the bargaining table.

The issue of parcel delivery seven days a week was referenced in both statements, with Canada Post saying significant change is required to prevent if from falling behind in the delivery market.

The union’s statement says its priority is ensuring weekend delivery does not compromise their regular, full-time routes on weekdays, and it says it isn’t satisfied Canada Post’s plan will accomplish that.

It says its negotiators also focused on improvements to a short-term disability plan.

The Canadian Union of Postal Workers could have been in a legal strike position as of Sunday.

“The threat of a strike during the holiday shipping season has already had a serious effect on our business, which has impacted volumes and revenue and will further deteriorate our financial situation,” Canada Post said in its statement Monday.

“To date, the union has been either resistant to change or has required serious constraints on our flexible delivery proposals, which would negate any potential benefits of the change. We remain hopeful that further discussions will afford a breakthrough, but urgency is now required.”

The union’s statement said its negotiators remain at the table and that the negotiations committee appreciates “the tremendous amount of support from members.”

“Your encouragement has not gone unnoticed,” it said.

Federal Labour Minister Steven MacKinnon met last Thursday with the union and Canada Post management to encourage them to reach a negotiated settlement.

The union announced last week its members had voted overwhelmingly to support a strike if a deal could not be reached at the bargaining table

Canada Post has said operations are continuing as normal.

This report by The Canadian Press was first published Nov. 4, 2024.

The Canadian Press. All rights reserved.



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