As the Bank of Canada prepares to make its first interest rate decision of the year on Wednesday, economists say headwinds in the “last mile” of the inflation fight will serve as a final hurdle before rate cuts can begin.
Inflation has cooled significantly from highs of 8.1 per cent in the summer of 2022, thanks in part to the Bank of Canada’s rapid run-up in its benchmark interest rate. But while the first year of the central bank’s rate tightening cycle saw inflation drop more than five percentage points, the rate of annual price hikes has remained largely steady in the range of three to four per cent over the past half year.
While the mild acceleration was expected by forecasters, BMO chief economist Doug Porter flagged a stubbornness in core inflation holding around the mid-three per cent market as “unsettling news” for the Bank of Canada’s efforts to restore annual price pressures to the two per cent target.
“The last mile (or kilometre) of the inflation fight may prove to be the most challenging,” he wrote in a note to clients last week.
‘Low-hanging fruit’ on inflation already ‘picked’
James Orlando, director of economics at TD Bank, tells Global News that inflation eased more quickly in the beginning of the tightening cycle because of the reasons price pressures shot up in the first place: supply chain bottlenecks.
The current inflationary period was primarily fuelled at first by global supply chains failing to meet a surge of demand in the pandemic recovery, intensified by Russia’s invasion of Ukraine driving up prices on oil and food. Orlando explains that as these pressures unwound, inflation dropped with it.
“The low-hanging fruit on getting inflation back down has been picked,” Orlando says.
0:47 Interest rates: Bank of Canada governor expects 2024 to be year of ‘transition’
But easing supply chains could only take the inflation fight so far, as they primarily influence goods prices. What’s driving inflation higher today, Orlando says, are demands for services as well as for shelter amid surging rent and mortgage costs.
But taming shelter inflation, which ran close to six per cent in December, doesn’t have a straightforward fix like remedying supply chains. The pressure in the rental market, for instance, is tied to “years and years of underbuilding” in Canada, Orlando says.
Solutions for a housing deficit take years to resolve, with the rental market unlikely to rebalance even amid efforts at multiple levels of government to quickly add supply, he explains.
“You can’t just bring more housing supply rapidly onto the market to fix that balance like you could with, say, semiconductor chips,” Orlando says.
“That’s why people say that last mile on inflation is going to be a lot harder to bring down, because that’s just a slow-moving train that we’re dealing with.”
Bank of Canada expected to hold rates
The Bank of Canada is widely expected to hold its benchmark interest rate on Wednesday.
Orlando explains that the decision for the Bank of Canada now is to gauge not whether it has sufficiently tightened monetary policy, but rather when it needs to shift to kickstarting the economy rather than cooling it.
To make that judgment, he says the central bank will have to pay close attention to the Canadian consumer.
Consumer spending in Canada has been largely flat over the past year, Orlando explains, but those trends are expected to weaken even further with more households due for mortgage renewals in 2024.
TD mortgage and credit card data since 2021 show that households with mortgage renewals in 2023 were forced to rein in their expenses to accommodate higher monthly payments, but those with terms expiring in 2024 largely haven’t made changes to their spending yet.
Orlando says that with these renewals on the books, the Bank of Canada can be fairly confident that consumer spending — and by extension, the economy and inflation — are set to slow further in the year ahead.
“All the factors are in place that should lead consumer spending in Canada to still remain weak in 2024,” he says. “And if I’m the Bank of Canada, I’m thinking, ‘OK, that means that we’ve probably done enough on interest rates.’’
1:41 Signs of lower interest rates could fuel Canada’s housing market rebound
RBC economists Nathan Janzen and Claire Fan said in a note to clients last week that inflation and still-high wage growth has been “too sticky” to allow the Bank of Canada to pursue early interest rate cuts. They said they expect the Bank of Canada to push back against the idea that a shift to rate cuts is coming soon.
Porter said in his note that persistent wage pressures and signs in late 2023 that the housing market was stirring would have the central bank “doggedly maintain a cautious stance” about the path for rates in its communications this week.
Risks for the rate cut timeline
Both RBC and BMO expect interest rate cuts to begin sometime in mid-2024, but TD Bank is among those forecasters expecting easing to begin in the spring.
That’s not a foregone conclusion, Orlando notes, particularly given risks in the same global supply chains that underpinned the initial run-up in inflation. Houthi attacks on ships in the Red Sea have forced a rerouting of trade routes and driven up freight costs in recent weeks, for example.
Fresh geopolitical tensions like these risk turning the tailwinds from unwinding supply chain kinks into headwinds, Orlando says, which if they materialize into significant price pressures, would mean “all bets are off” for where inflation lands in 2024.
1:46 WEF summit: Freeland, Carney warn of future supply shocks amid global instability
However, he also notes that the risks to the downside for inflation if the Canadian economy slows more sharply likely outweigh the upside risks of another supply chain shock for the Bank of Canada at this juncture.
If the Canadian economy happens to accelerate, for example with a strong spring housing market, and the job market remains resilient, Orlando says that will push back the Bank of Canada’s schedule for rate cuts. Conversely, if there’s a sharper slowdown, expect that timeline to move up.
Orlando says that while the labour market showed plenty of signs of cooling in 2024, that slowdown might start to bring about net job losses in the months ahead. Like mortgage renewals, a rising trend of layoffs would have lots of influence over Canadian consumers if they see their incomes take a significant hit.
“As the Canadian consumer goes, so goes the Canadian economy,” Orlando says.
Montreal Alouettes wide receiver Tyson Philpot has announced he will be out for the rest of the CFL season.
The Delta, B.C., native posted the news on his Instagram page Thursday.
“To Be Continued. Shoutout my team, the fans of the CFL and the whole city of Montreal! I can’t wait to be back healthy and write this next chapter in 2025,” the statement read.
Philpot, 24, injured his foot in a 33-23 win over the Hamilton Tiger-Cats on Aug. 10 and was placed on the six-game injured list the next week.
The six-foot-one, 195-pound receiver had 58 receptions, 779 yards and five touchdowns in nine games for the league-leading Alouettes in his third season.
Philpot scored the game-winning touchdown in Montreal’s Grey Cup win last season to punctuate a six-reception, 63-yard performance.
This report by The Canadian Press was first published Sept. 12, 2024.
MIAMI GARDENS, Fla. (AP) — Miami Dolphins quarterback Tua Tagovailoa sustained a concussion for the third time in his NFL career, leaving his team’s game Thursday night against Buffalo after running into defensive back Damar Hamlin and hitting the back of his head against the turf.
Tagovailoa remained down for about two minutes before getting to his feet and walking to the sideline after the play in the third quarter. He made his way to the tunnel not long afterward, looking into the stands before smiling and departing toward the locker room.
The Dolphins needed almost no time before announcing it was a concussion. The team said he had two during the 2022 season, and Tagovailoa was diagnosed with another concussion when he was a college player at Alabama.
Dolphins coach Mike McDaniel said Tagovailoa would get “proper procedural evaluation” and “appropriate care” on Friday.
“The furthest thing from my mind is, ‘What is the timeline?’ We just need to evaluate and just worry about my teammate, like the rest of the guys are,” McDaniel said. “We’ll get more information tomorrow and take it day by day from here.”
Some players saw Tagovailoa in the locker room after the game and said they were encouraged. Tagovailoa spoke with some players and then went home after the game, McDaniel said.
“I have a lot of love for Tua, built a great relationship with him,” said quarterback Skylar Thompson, who replaced Tagovailoa after the injury. “You care about the person more than the player and everybody in the organization would say the same thing. Just really praying for Tua and hopefully everything will come out all right.”
Tagovailoa signed a four-year, $212 million extension before this season — a deal that makes him one of the highest-paid players in the NFL — and was the NFL’s leading passer in Week 1 this season. Tagovailoa left with the Dolphins trailing 31-10, and that was the final score.
“If you know Tua outside of football, you can’t help but feel for him,” Bills quarterback Josh Allen said on Amazon following the game. “He’s a great football player but he’s an even greater human being. He’s one of the best humans on the planet. I’ve got a lot of love for him and I’m just praying for him and his family, hoping everything’s OK. But it’s tough, man. This game of football that we play, it’s got its highs and it’s got its lows — and this is one of the lows.”
Tagovailoa’s college years and first three NFL seasons were marred by injury, though he positioned himself for a big pay bump with an injury-free and productive 2023 as he led the Dolphins into the playoffs. He threw for 29 touchdowns and a league-best 4,624 yards last year.
When, or if, he can come back this season is anyone’s guess. Tagovailoa said in April 2023 that the concussions he had in the 2022 season left him contemplating his playing future. “I think I considered it for a time,” he said then, when asked if he considered stepping away from the game to protect himself.
McDaniel said it’s not his place to say if Tagovailoa should return to football. “He’ll be evaluated and we’ll have conversations and progress as appropriate,” McDaniel said.
Tagovailoa was hurt Thursday on a fourth-down keeper with about 4:30 left in the third. He went straight ahead into Hamlin and did not slide, leading with his right shoulder instead.
Hamlin was the player who suffered a cardiac arrest after making a tackle during a Monday night game in January 2023 at Cincinnati, causing the NFL to suspend a pivotal game that quickly lost significance in the aftermath of a scary scene that unfolded in front of a national television audience.
Tagovailoa wound up on his back, both his hands in the air and Bills players immediately pointed at him as if to suggest there was an injury. Dolphins center Aaron Brewer quickly did the same, waving to the sideline.
Tagovailoa appeared to be making a fist with his right hand as he lay on the ground. It was movement consistent with something that is referred to as the “fencing response,” which can be common after a traumatic brain injury.
Tagovailoa eventually got to his feet. McDaniel grabbed the side of his quarterback’s head and gave him a kiss on the cheek as Tagovailoa departed. Thompson came into the game to take Tagovailoa’s spot.
“I love Tua on and off the football field,” Bills edge Von Miller said. “I’m a huge fan of him. I can empathize and sympathize with him because I’ve been there. I wish him the best.”
Tagovailoa’s history with concussions — and how he has since worked to avoid them — is a huge part of the story of his career, and now comes to the forefront once again.
He had at least two concussions during the 2022 season. He was hurt in a Week 3 game against Buffalo and cleared concussion protocol, though he appeared disoriented on that play but returned to the game.
The NFL later changed its concussion protocol to mandate that if a player shows possible concussion symptoms — including a lack of balance or stability — he must sit out the rest of the game.
Less than a week later, in a Thursday night game at Cincinnati, Tagovailoa was concussed on a scary hit that briefly knocked him unconscious and led to him being taken off the field on a stretcher.
His second known concussion of that season came in a December game against Green Bay, and he didn’t play for the rest of the 2022 season. After that, Tagovailoa began studying ways where he may be able to fall more safely and protect himself against further injury — including studying jiu-jitsu.
“I’m not worried about anything that’s out of my hands,” McDaniel said. “I’m just worried about the human being.”
NEW YORK (AP) — When her husband turns on the television to hear news about the upcoming presidential election, that’s often a signal for Lori Johnson Malveaux to leave the room.
It can get to be too much. Often, she’ll go to a TV in another room to watch a movie on the Hallmark Channel or BET. She craves something comforting and entertaining. And in that, she has company.
While about half of Americans say they are following political news “extremely” or “very” closely, about 6 in 10 say they need to limit how much information they consume about the government and politics to avoid feeling overloaded or fatigued, according to a new survey from the Associated Press-NORC Center for Public Affairs Research and USAFacts.
Make no mistake: Malveaux plans to vote. She always does. “I just get to the point where I don’t want to hear the rhetoric,” she said.
The 54-year-old Democrat said she’s most bothered when she hears people on the news telling her that something she saw with her own eyes — like the Jan. 6, 2021, attack on the U.S. Capitol — didn’t really happen.
“I feel like I’m being gaslit. That’s the way to put it,” she said.
Sometimes it feels like ‘a bombardment’
Caleb Pack, 23, a Republican from Ardmore, Oklahoma, who works in IT, tries to keep informed through the news feeds on his phone, which is stocked with a variety of sources, including CNN, Fox News, The Wall Street Journal and The Associated Press.
Yet sometimes, Pack says, it seems like a bombardment.
“It’s good to know what’s going on, but both sides are pulling a little bit extreme,” he said. “It just feels like it’s a conversation piece everywhere, and it’s hard to escape it.”
Media fatigue isn’t a new phenomenon. A Pew Research Center survey conducted in late 2019 found roughly two in three Americans felt worn out by the amount of news there is, about the same as in a poll taken in early 2018. During the 2016 presidential campaign, about 6 in 10 people felt overloaded by campaign news.
But it can be particularly acute with news related to politics. The AP-NORC/USAFacts poll found that half of Americans feel a need to limit their consumption of information related to crime or overseas conflicts, while only about 4 in 10 are limiting news about the economy and jobs.
It’s easy to understand, with television outlets like CNN, Fox News Channel and MSNBC full of political talk and a wide array of political news online, sometimes complicated by disinformation.
“There’s a glut of information,” said Richard Coffin, director of research and advocacy for USAFacts, “and people are having a hard time figuring out what is true or not.”
Women are more likely to feel they need to limit media
In the AP-NORC poll, about 6 in 10 men said they follow news about elections and politics at least “very” closely, compared to about half of women. For all types of news, not just politics, women are more likely than men to report the need to limit their media consumption, the survey found.
White adults are also more likely than Black or Hispanic adults to say they need to limit media consumption on politics, the poll found.
Kaleb Aravzo, 19, a Democrat, gets a baseline of news by listening to National Public Radio in the morning at home in Logan, Utah. Too much politics, particularly when he’s on social media sites like TikTok and Instagram, can trigger anxiety and depression.
“If it pops up on my page when I’m on social media,” he said, “I’ll just scroll past it.”
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Sanders reported from Washington. David Bauder writes about media for the AP. Follow him at http://x.com/dbauder.
The AP poll of 1,019 adults was conducted July 29-August 8, 2024, using a sample drawn from NORC’s probability-based AmeriSpeak Panel, which is designed to be representative of the U.S. population. The margin of sampling error for all respondents is plus or minus 4.0 percentage points.
