Bank of Canada raises rate again to 4.25% — but opens door to staying there | Canada News Media
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Bank of Canada raises rate again to 4.25% — but opens door to staying there

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The Bank of Canada raised its benchmark interest rate by 50 basis points, to 4.25 per cent.

The move was widely expected by economists, who were anticipating a rate hike of either 25 or 50 points.

Canada’s central bank has raised its rate seven times this year in its fight to wrestle inflation into submission. In the process, the bank has taken its rate from 0.25 per cent to 4.25 per cent.

That’s had a huge impact on the rates that Canadian consumers and businesses get from their banks on things like savings accounts and mortgages.

In previous rate hikes, the bank made it clear that it would continue to raise its trend-setting rate until inflation came back to within the range of up to three per cent that it targets. As recently as October, the bank was saying it “expects” that rates will have to go even higher.

The month before, they said they “still judge” that rates would have to go higher. Even after announcing its biggest rate hike ever, of a full percentage point in July, the bank was saying it “continues to judge that interest rates will need to rise further.”

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But Wednesday’s statement accompanying the rate decision was a clear departure from that tone, as the language shifted to a more neutral, wait-and-see approach.

The bank and its policy makers “will be considering” whether or not the rate has to go higher in order to bring supply and demand back into balance and return inflation to target, the bank said Wednesday.

For economist Royce Mendes at Desjardins, that’s a clear pivot. “Upcoming readings on the labour market, inflation and the central bank’s own surveys will dictate whether there’s more to come,” he said. “We now expect central bankers to officially communicate a pause at their January announcement, when they will have a fresh set of forecasts in hand.”

 

Rate hikes gobble up every penny of household spending

 

Rabia Shumayal of Mississauga, Ont. has seen her mortgage rate go from 1.9% to above 5% this year, which has forced her to cut out basically all other spending for her family.

Stopping the barrage of rate hikes is long overdue for people like Rabia Shumayal. She and her husband bought a home in Mississauga, Ont., during the pandemic, a decision she says she has since come to regret because of the rapid escalation in her mortgage costs.

“If they keep increasing the interest rate at this rate, I don’t know how I’m going to afford [my mortage] bill,” she told CBC News in an interview.

Skyrocketing payments

On the advice of her mortgage broker and others, she opted for a variable rate loan.

Her initial rate was 1.92 per cent, which resulted in a monthly payment well within her family budget. But rates have skyrocketed to more than five per cent since then, causing her mortgage payment to balloon to the point where it gobbles up every spare cent the family has, she said — and then some.

“My kids don’t have any extracurriculars because I can’t afford it,” she said. “Every single penny is going toward the mortgage.”

She bristles at suggestions that families can beat inflation by cutting back on expenses, such as the recent quip by federal Finance Minister Chrystia Freeland that families should consider cancelling their subscriptions to Disney+.

“I already don’t have one of those things,” Shumayal says. “And even if I had those, how would getting rid of $30 make up for $1,000 of an escalation of an interest rate?”

While she’s glad to have a home for her children, she’s angry that the bank seems committed to raising rates and punishing families like hers, despite the bank’s infamous 2020 pledge that “interest rates are going to be low for a long time.”

“I should punch myself on that decision,” she says. “Why did I listen to all these people?”

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Port of Montreal employer submits ‘final’ offer to dockworkers, threatens lockout

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MONTREAL – The employers association at the Port of Montreal has issued the dockworkers’ union a “final, comprehensive offer,” threatening to lock out workers at 9 p.m. Sunday if a deal isn’t reached.

The Maritime Employers Association says its new offer includes a three per cent salary increase per year for four years and a 3.5 per cent increase for the two subsequent years. It says the offer would bring the total average compensation package of a longshore worker at the Port of Montreal to more than $200,000 per year at the end of the contract.

“The MEA agrees to this significant compensation increase in view of the availability required from its employees,” it wrote Thursday evening in a news release.

The association added that it is asking longshore workers to provide at least one hour’s notice when they will be absent from a shift — instead of one minute — to help reduce management issues “which have a major effect on daily operations.”

Syndicat des débardeurs du port de Montréal, which represents nearly 1,200 longshore workers, launched a partial unlimited strike on Oct. 31, which has paralyzed two terminals that represent 40 per cent of the port’s total container handling capacity.

A complete strike on overtime, affecting the whole port, began on Oct. 10.

The union has said it will accept the same increases that were granted to its counterparts in Halifax or Vancouver — 20 per cent over four years. It is also concerned with scheduling and work-life balance. Workers have been without a collective agreement since Dec. 31, 2023.

Only essential services and activities unrelated to longshoring will continue at the port after 9 p.m. Sunday in the event of a lockout, the employer said.

The ongoing dispute has had major impacts at Canada’s second-biggest port, which moves some $400 million in goods every day.

On Thursday, Montreal port authority CEO Julie Gascon reiterated her call for federal intervention to end the dispute, which has left all container handling capacity at international terminals at “a standstill.”

“I believe that the best agreements are negotiated at the table,” she said in a news release. “But let’s face it, there are no negotiations, and the government must act by offering both sides a path to true industrial peace.”

Federal Labour Minister Steven MacKinnon issued a statement Thursday, prior to the lockout notice, in which he criticized the slow pace of talks at the ports in Montreal and British Columbia, where more than 700 unionized port workers have been locked out since Nov. 4.

“Both sets of talks are progressing at an insufficient pace, indicating a concerning absence of urgency from the parties involved,” he wrote on the X social media platform.

This report by The Canadian Press was first published Nov. 8, 2024.

The Canadian Press. All rights reserved.



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‘Disgraceful:’ N.S. Tory leader slams school’s request that military remove uniform

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HALIFAX – Nova Scotia Premier Tim Houston says it’s “disgraceful and demeaning” that a Halifax-area school would request that service members not wear military uniforms to its Remembrance Day ceremony.

Houston’s comments were part of a chorus of criticism levelled at the school — Sackville Heights Elementary — whose administration decided to back away from the plan after the outcry.

A November newsletter from the school in Middle Sackville, N.S., invited Armed Forces members to attend its ceremony but asked that all attendees arrive in civilian attire to “maintain a welcoming environment for all.”

Houston, who is currently running for re-election, accused the school’s leaders of “disgracing themselves while demeaning the people who protect our country” in a post on the social media platform X Thursday night.

“If the people behind this decision had a shred of the courage that our veterans have, this cowardly and insulting idea would have been rejected immediately,” Houston’s post read. There were also several calls for resignations within the school’s administration attached to Houston’s post.

In an email to families Thursday night, the school’s principal, Rachael Webster, apologized and welcomed military family members to attend “in the attire that makes them most comfortable.”

“I recognize this request has caused harm and I am deeply sorry,” Webster’s email read, adding later that the school has the “utmost respect for what the uniform represents.”

Webster said the initial request was out of concern for some students who come from countries experiencing conflict and who she said expressed discomfort with images of war, including military uniforms.

Her email said any students who have concerns about seeing Armed Forces members in uniform can be accommodated in a way that makes them feel safe, but she provided no further details in the message.

Webster did not immediately respond to a request for comment.

At a news conference Friday, Houston said he’s glad the initial request was reversed but said he is still concerned.

“I can’t actually fathom how a decision like that was made,” Houston told reporters Friday, adding that he grew up moving between military bases around the country while his father was in the Armed Forces.

“My story of growing up in a military family is not unique in our province. The tradition of service is something so many of us share,” he said.

“Saying ‘lest we forget’ is a solemn promise to the fallen. It’s our commitment to those that continue to serve and our commitment that we will pass on our respects to the next generation.”

Liberal Leader Zach Churchill also said he’s happy with the school’s decision to allow uniformed Armed Forces members to attend the ceremony, but he said he didn’t think it was fair to question the intentions of those behind the original decision.

“We need to have them (uniforms) on display at Remembrance Day,” he said. “Not only are we celebrating (veterans) … we’re also commemorating our dead who gave the greatest sacrifice for our country and for the freedoms we have.”

NDP Leader Claudia Chender said that while Remembrance Day is an important occasion to honour veterans and current service members’ sacrifices, she said she hopes Houston wasn’t taking advantage of the decision to “play politics with this solemn occasion for his own political gain.”

“I hope Tim Houston reached out to the principal of the school before making a public statement,” she said in a statement.

This report by The Canadian Press was first published Nov. 8, 2024.

The Canadian Press. All rights reserved.



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Sides in B.C. port dispute to meet in bid to end lockout after talk with minister

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VANCOUVER – Employers and the union representing supervisors embroiled in a labour dispute that triggered a lockout at British Columbia’s ports will attempt to reach a deal when talks restart this weekend.

A spokesman from the office of federal Labour Minister Steven MacKinnon has confirmed the minister spoke with leaders at both the BC Maritime Employers Association and International Longshore and Warehouse Union Local 514, but did not invoke any section of the Canadian Labour Code that would force them back to talks.

A statement from the ministry says MacKinnon instead “asked them to return to the negotiation table,” and talks are now scheduled to start on Saturday with the help of federal mediators.

A meeting notice obtained by The Canadian Press shows talks beginning in Vancouver at 5 p.m. and extendable into Sunday and Monday, if necessary.

The lockout at B.C. ports by employers began on Monday after what their association describes as “strike activity” from the union. The result was a paralysis of container cargo traffic at terminals across Canada’s west coast.

In the meantime, the union says it has filed a complaint against the employers for allegedly bargaining in bad faith, a charge that employers call a “meritless claim.”

The two sides have been without a deal since March 2023, and the employers say its final offer presented last week in the last round of talks remains on the table.

The proposed agreement includes a 19.2 per cent wage increase over a four-year term along with an average lump sum payment of $21,000 per qualified worker.

The union has said one of its key concerns is the advent of port automation in cargo operations, and workers want assurances on staffing levels regardless of what technology is being used at the port.

The disruption is happening while two container terminals are shut down in Montreal in a separate labour dispute.

It leaves container cargo traffic disrupted at Canada’s two biggest ports, Vancouver and Montreal, both operating as major Canadian trade gateways on the Pacific and Atlantic oceans.

This is one of several work disruptions at the Port of Vancouver, where a 13-day strike stopped cargo last year, while labour strife in the rail and grain-handling sectors led to further disruptions earlier this year.

This report by The Canadian Press was first published Nov. 8, 2024.

The Canadian Press. All rights reserved.



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