Bank of Canada Governor Tiff Macklem takes part in a press conference in Ottawa on Oct. 25. Mr. Macklem said Wednesday that tight monetary policy is working to cool demand in the economy.PATRICK DOYLE/Reuters
Bank of Canada Governor Tiff Macklem said borrowing costs may now be “restrictive enough” to get inflation under control, his most explicit comments to date suggesting that interest rates have peaked.
Speaking to the Saint John Region Chamber of Commerce on Wednesday, Mr. Macklem said that tight monetary policy is working to cool demand in the economy and that the central bank expects economic activity in Canada to be weak for the next few quarters.
That “means more downward pressure on inflation is in the pipeline,” he said in his first speech since holding the bank’s policy rate steady on Oct. 25. “In short, the excess demand in the economy that made it too easy to raise prices is now gone.”
Mr. Macklem did not rule out further rate hikes if inflation proves more stubborn than expected, and said that the bank needs to “stay the course.” But his remarks seemed to reinforce market and analyst expectations that the central bank is done tightening monetary policy, and that the key question now is when the bank will begin cutting rates.
A day earlier, Statistics Canada reported a significant drop in inflation. Annual Consumer Price Index growth declined to 3.1 per cent in October from 3.8 per cent in September. That puts the inflation rate only slightly above the upper end of the Bank of Canada’s inflation control band of 1 per cent to 3 per cent. It formally targets 2-per-cent inflation.
In a press conference after the speech, Mr. Macklem was asked whether the federal government’s fall economic statement, published Tuesday, would help or hinder the bank’s fight with inflation. He had previously said that monetary policy and fiscal policy were not “rowing” in the same direction.
“From the perspective of monetary policy, the fall economic statement suggests that the government is not adding new or additional inflationary pressures over the next couple of years, which is the critical period over which we will be looking to reduce inflation and get it back to the target,” Mr. Macklem said.
He added that the government’s new commitment to keep budget deficits under 1 per cent of gross domestic product, starting in the 2026-27 fiscal year, is “helpful.”
The fall economic statement showed Ottawa’s deficit for the current fiscal year was essentially unchanged since the spring budget, despite the government announcing an additional $20.4-billion in spending over the next six years. Expected deficits in the next few years were revised up by an average of $7-billion, although this mostly reflects higher debt-servicing costs and slower revenue growth.
The bank has raised interest rates 10 times since March, 2022, to deal with inflation, lifting its policy rate from 0.25 per cent to 5 per cent, the highest level in more than two decades. Mr. Macklem and his team have left rates unchanged for the past two interest-rate decisions. The next rate announcement is on Dec. 6.
Most private-sector economists believe that the Bank of Canada has finished tightening monetary policy. Many are betting it will start lowering rates around the middle of next year.
“The confirmation that the governor believes that rates are high enough to return inflation to 2 per cent is clearly dovish,” Royce Mendes, head of macro strategy at Desjardins, wrote in a note to clients about the speech.
“Our view is that further economic weakness will be seen over the remainder of this year and early in 2024.” he wrote. “That will be enough to prompt rate cuts in the second quarter of 2024.”
Growth in Canada’s gross domestic product has essentially flatlined since the spring, and the unemployment rate has moved up to 5.7 per cent from a low of 4.9 per cent last year. Statistics Canada will publish third-quarter GDP numbers next week.
Mr. Macklem said it’s too early to be talking about rate cuts. But he said the bank could start lowering rates before inflation reaches 2 per cent. That’s because monetary policy is forward-looking, and interest-rate changes take many quarters to have an impact.
Before contemplating rate cuts, the bank will need to see a sustained decline in core-inflation measures, which strip out the most volatile price movements, Mr. Macklem said. He noted that core inflation moved lower in October, but that “one month is not a trend.” The bank is also looking to see a fall in short-term inflation expectations and a slowdown in wage growth.
Much of the speech focused on the pain of high inflation, and why Canadians have such a grim view of the economy despite a strong labour market.
“People are working hard, but their salaries don’t buy what they used to. They can’t afford the things they need to live. It feels unfair. That feeling of unfairness eats away at the fabric of society,” he said.
This happened in the high-inflation period of the 1970s. At that time, it took much higher interest rates than today, and a painful recession, to break the back of inflation. Mr. Macklem said he was hopeful that this won’t be necessary today. The central bank acted more forcefully this time around, he said, and inflation expectations remain better anchored than in the 1970s.
TORONTO – Canada Goose Holdings Inc. says it has signed a deal that will result in the creation of its first eyewear collection.
The deal announced on Thursday by the Toronto-based luxury apparel company comes in the form of an exclusive, long-term global licensing agreement with Marchon Eyewear Inc.
The terms and value of the agreement were not disclosed, but Marchon produces eyewear for brands including Lacoste, Nike, Calvin Klein, Ferragamo, Longchamp and Zeiss.
Marchon plans to roll out both sunglasses and optical wear under the Canada Goose name next spring, starting in North America.
Canada Goose says the eyewear will be sold through optical retailers, department stores, Canada Goose shops and its website.
Canada Goose CEO Dani Reiss told The Canadian Press in August that he envisioned his company eventually expanding into eyewear and luggage.
This report by The Canadian Press was first published Sept. 19, 2024.
Almost seven years since news broke of an alleged conspiracy to fix the price of packaged bread across Canada, the saga isn’t over: the Competition Bureau continues to investigate the companies that may have been involved, and two class-action lawsuits continue to work their way through the courts.
Here’s a timeline of key events in the bread price-fixing case.
Oct. 31, 2017: The Competition Bureau says it’s investigating allegations of bread price-fixing and that it was granted search warrants in the case. Several grocers confirm they are co-operating in the probe.
Dec. 19, 2017: Loblaw and George Weston say they participated in an “industry-wide price-fixing arrangement” to raise the price of packaged bread. The companies say they have been co-operating in the Competition Bureau’s investigation since March 2015, when they self-reported to the bureau upon discovering anti-competitive behaviour, and are receiving immunity from prosecution. They announce they are offering $25 gift cards to customers amid the ongoing investigation into alleged bread price-fixing.
Jan. 31, 2018: In court documents, the Competition Bureau says at least $1.50 was added to the price of a loaf of bread between about 2001 and 2016.
Dec. 20, 2019: A class-action lawsuit in a Quebec court against multiple grocers and food companies is certified against a number of companies allegedly involved in bread price-fixing, including Loblaw, George Weston, Metro, Sobeys, Walmart Canada, Canada Bread and Giant Tiger (which have all denied involvement, except for Loblaw and George Weston, which later settled with the plaintiffs).
Dec. 31, 2021: A class-action lawsuit in an Ontario court covering all Canadian residents except those in Quebec who bought packaged bread from a company named in the suit is certified against roughly the same group of companies.
June 21, 2023: Bakery giant Canada Bread Co. is fined $50 million after pleading guilty to four counts of price-fixing under the Competition Act as part of the Competition Bureau’s ongoing investigation.
Oct. 25 2023: Canada Bread files a statement of defence in the Ontario class action denying participating in the alleged conspiracy and saying any anti-competitive behaviour it participated in was at the direction and to the benefit of its then-majority owner Maple Leaf Foods, which is not a defendant in the case (neither is its current owner Grupo Bimbo). Maple Leaf calls Canada Bread’s accusations “baseless.”
Dec. 20, 2023: Metro files new documents in the Ontario class action accusing Loblaw and its parent company George Weston of conspiring to implicate it in the alleged scheme, denying involvement. Sobeys has made a similar claim. The two companies deny the allegations.
July 25, 2024: Loblaw and George Weston say they agreed to pay a combined $500 million to settle both the Ontario and Quebec class-action lawsuits. Loblaw’s share of the settlement includes a $96-million credit for the gift cards it gave out years earlier.
Sept. 12, 2024: Canada Bread files new documents in Ontario court as part of the class action, claiming Maple Leaf used it as a “shield” to avoid liability in the alleged scheme. Maple Leaf was a majority shareholder of Canada Bread until 2014, and the company claims it’s liable for any price-fixing activity. Maple Leaf refutes the claims.
This report by The Canadian Press was first published Sept. 19, 2024.
Companies in this story: (TSX:L, TSX:MFI, TSX:MRU, TSX:EMP.A, TSX:WN)
TORONTO – TD Bank Group, which is mired in a money laundering scandal in the U.S., says chief executive Bharat Masrani will retire next year.
Masrani, who will retire officially on April 10, 2025, says the bank’s, “anti-money laundering challenges,” took place on his watch and he takes full responsibility.
The bank named Raymond Chun, TD’s group head, Canadian personal banking, as his successor.
As part of a transition plan, Chun will become chief operating officer on Nov. 1 before taking over the top job when Masrani steps down at the bank’s annual meeting next year.
TD also announced that Riaz Ahmed, group head, wholesale banking and president and CEO of TD Securities, will retire at the end of January 2025.
TD has taken billions in charges related to ongoing U.S. investigations into the failure of its anti-money laundering program.
This report by The Canadian Press was first published Sept. 19, 2024.
