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BOJ, BOE pledge to ensure market stability amid virus fears –



Global central bankers from Japan to the U.K. promised to act as needed to stabilize financial markets rattled by the spreading coronavirus as pressure builds on monetary policy makers to do more to safeguard their economies.

In an emergency statement on Monday, Governor Haruhiko Kuroda said the Bank of Japan would “strive to provide ample liquidity and ensure stability in financial markets.” The Bank of England followed up by saying it’s working with U.K. authorities and international partners to “ensure all necessary steps are taken to protect financial and monetary stability.”

The commitments came after Federal Reserve Chairman Jerome Powell on Friday opened the door to cutting interest rates in the U.S. to contain what he called the “evolving risks” to economic growth from the virus.

The prospect of central banks’ action helped halt the worst rout in stocks since the global financial crisis more than a decade ago. Money markets now see the Fed lowering its main rate by 50 basis points this month and give a 70 per cent chance the European Central Bank will pare its by 10 basis points.

There is even speculation the Fed will move before its policy makers are set to gather on March 17-18 and some economists see the potential for global policy makers to coordinate cuts for the first time since 2008, when central banks acted to prevent the collapse of the international banking system.

Investors increasingly bet the central banks of Australia and Canada will ease at meetings already scheduled for this week.

“Global central banks will almost certainly all induce one form of easing or another, “ said Vishnu Varathan, head of economics and strategy at Mizuho Bank Ltd. in Singapore.

In another sign of increasing worry, the OECD said global economic growth will sink to levels not seen in over a decade as the outbreak hammers demand and supply.

The French government said on Monday that Group of Seven finance ministers will hold a conference call this week to coordinate their response to the spread of the virus. Italy is already seeking to widen its budget deficit to pay for at least 3.6 billion euros (US$4 billion) in proposed emergency economic measures.

Just a week ago, key central bankers were saying it was too soon to respond to the outbreak. The plunge in global stocks has forced a change in stance. Economists at Goldman Sachs predict the Fed will slash its key rate 50 basis point this month and ultimately by 100 basis points in the first half of the year. The Bank of England will cut by 50 basis points and the European Central Bank by 10 basis points, it said.

“Global central bankers are intensely focused on the downside risks from the virus,” economists led by Jan Hatzius said in a report on Sunday. “We suspect that they view the impact of a coordinated move on confidence as greater than the sum of the impacts of each individual move.”

Japan to Indonesia

The Bank of Japan backed up Monday’s promise to help markets by offering to buy 500 billion yen (US$4.6 billion) of government bonds to provide liquidity. Indonesia’s central bank lowered the amount lenders need to keep on reserve to shore up liquidity in its markets.

By not alluding to monetary policy as Powell did, Japan’s statement revealed the constraints the BOJ and many other central banks are under. Japan’s key rate is already minus 0.1 per cent compared to the Fed’s 1.5 per cent to 1.75 per cent range.

The ECB is also limited by a deposit rate that stands at minus 0.5 per cent. Prior to the virus outbreak, policy makers were signaling a reluctance to reduce it even further given concern that banks, who are already seeing profit margins squeezed by negative rates, might pull back on lending.

President Christine Lagarde said last week that the ECB didn’t yet think the outbreak will have a lasting impact on inflation, its primary mandate.

An ECB spokesman declined to comment on whether a statement would be issued on Monday, and referred back to Lagarde’s comments of last week.

“We are vigilant, we are mobilized, but we remain calm and proportional in the responses we need to have,” Bank of France Governor Francois Villeroy de Galhau said on BFM Business television on Monday.

Less Effective?

Even before the latest crisis, economists were questioning the benefits of ultra-loose monetary policies given more than 700 interest rate cuts and several rounds of bond-buying since the financial crisis. They boosted asset prices, but failed to generate substantial rebounds in economic growth.

For central bankers, the new challenge is that easier monetary policy may be even less effective to combat the economic pain posed by a health emergency.

That’s because by shutting workplaces in China and increasingly abroad, the virus is dealing a blow to the world’s capacity to produce goods. Lower rates won’t help manufacturers whose factories are closed or which lack materials to make their own products. On the demand-side, they would likely also fail to spur consumers to shop or travel if they’re worried about infection.

But easier monetary policies should offset tighter financial conditions, support markets and maintain the supply of credit, thus helping to drive a rebound in demand once the virus is under control. Inflation below target also gives the central banks scope to act.

Fresh evidence of the economic shock triggered by the virus came Monday as IHS Markit reported its Chinese factory index had dropped to the lowest since the series began in 2004. Gauges for Japan and South Korea also slumped.

“Rate cuts are not the silver bullet, although they can support markets somewhat,” said Jerome Jean Haegeli, chief economist at the Swiss Re Institute in Zurich.

Governments will likely have to help too. Economists at Morgan Stanley predict the combined fiscal deficit of the four largest advanced economies plus China will now run to at least 4.7 per cent of global gross domestic product this year, the biggest since 2011.

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Why You Can’t Just Order Baby Formula From Canada – Lifehacker



Image for article titled Why You Can’t Just Order Baby Formula From Canada
Photo: The Toidi (Shutterstock)

With baby formula continuing to be in short supply, parents of infants are looking for creative ways to get their hands on that precious Enfamil—but a simple, seemingly ingenious solution that’s going viral right now will not work as described. The suggestion that’s spreading on Facebook and Twitter advises parents to go to Amazon and change their account’s country from the U.S. to Canada.

The claim is that if you do this, you will be rewarded with all kinds of baby formula-purchasing options—because Canada doesn’t have a major formula shortage. The problem, however, comes when you want to get the formula (or anything else) actually delivered from Amazon Canada. The company will only ship products within Canada, so unless you have a friend in Manitoba, it’s not going to work.

Amazon’s shipping restrictions page says:

Certain restrictions prevent us from shipping certain products to all geographical locations. Restrictions for specific items may require the purchaser to provide additional information in order to ship the item.

You might be able to find a third-party formula shipper on Amazon, but this is expensive in terms of shipping costs, and it might not be legal, depending on the kind of formula being imported.

The FDA’s role in all this

The larger issue of why the U.S. as a nation doesn’t import more baby formula is more complicated than Amazon’s rules. Only about 2% of the U.S.’s formula comes from foreign sources. February’s recall from major manufacturer Abbott threw off our delicate national formula supply chain, and correcting the problem presents some serious challenges.

If it was some other commodity, maybe more could have been imported quickly, but we’re particular about our baby formula. Formula has to meet the FDA’s nutritional standards and other requirements to be sold here. While European brands of formula generally meet or exceed the FDA’s nutritional requirements, (so much so that there’s a black market for foreign formula) the packaging and other aspects of the products are a different story.

The recall and FDA approval is only part of the story—the rest is economics.

Tariffs and dairy protection

In order to protect the U.S. dairy farming industry and U.S. formula manufacturers, the tariff on importing baby formula is set at 17.5% for most kinds of infant formula. The recently revamped NAFTA agreement actually raised the cost of importing Canadian formula, discouraging anyone from building a new plant there, and making it costly to import any excess from Canadian factories.

Light at the end of the tunnel?

While there’s no way to change tariffs quickly, the government is taking other steps to try to end the crisis. The FDA this week announced plans to ease the shortage through loosening up some of its rules (but not the ones covering nutritional requirements), and Abbot today announced its facility should be back online, with new safety standards in place, in a couple weeks.

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NS gas prices jump by 9.5 cents – CTV News Atlantic



Tuesday was another record-breaking day for gas prices in Nova Scotia after they jumped by 9.5 cents overnight — just four days after they had reached $2 per litre in some parts of the province.

The minimum price of regular self-serve is now $2.08 per litre in the Halifax area, or Zone 1. The new maximum price is $2.10.

The biggest jump was in Cape Breton, or Zone 6, where the minimum price of regular self-serve gas is now $2.10 per litre. The maximum price is $2.12.

There were long lineups at some Nova Scotia gas stations Monday night after the Utility and Review Board announced that it would invoke its interrupter clause at midnight.

The price of diesel did not change Monday. However, the UARB said Tuesday that it would invoke the interrupter clause, and the price of diesel oil would be adjusted at midnight.

The price of gasoline won’t be affected by the adjustment.

The UARB said the price adjustments are “necessary due to significant shifts in the market price” of gasoline and diesel.

Gas prices are showing no signs of letting up as the average price in Canada tops $2 a litre for the first time.

Natural Resources Canada says the average price across the country for regular gasoline hit $2.06 per litre on Monday for an all-time high.

The average was a nine-cent jump from the $1.97 per litre record set last week, and is up about 30 cents a litre since mid-April.

Gas prices have been climbing steadily since late February when oil spiked to around US$100 a barrel after Russia invaded Ukraine. The price jumped to over US$110 per barrel last week.

Record-high gas prices fuel frustration

When Sam Vatcher saw the price at the pumps in Halifax this morning, she was shocked.

“I don’t know how anyone is going to drive anywhere,” said Vatcher.

The latest prices have SUV driver Bill Foster wondering how he will be able to afford fuel going forward.

“I’ve got to get kids to sports and I’ve got to get kids to school,” said Foster. “Other stuff is going to have to get cut out just to pay for gas.”

In addition to the conflict in Ukraine, gas analyst Patrick Dehaan says the high gas prices are also largely linked to the pandemic.

“Canadians and Americans’ global consumption plummeted along with oil prices,” said Dehaan. “To the degree that oil companies started shutting down production. That was the problem.”

Dehaan said, during the pandemic, oil production went offline. Then, as the economy reopened, Canadians started leaving their homes and travelling more.

“Global demand started going back up,” he explained. “But because of the shutdowns, we very quickly developed an imbalance between supply-and-demand that has grown over time.”

As a result, some feel Canadian consumers will move away from oil and gas in favour of electric vehicles.

Electric vehicle advocate Kurt Sampson says he tells his children every day, “when you are older, and when you grow up it will be the opposite. Everybody will be driving electric vehicles.”

Sampson has an app on his phone that tracks fuel savings. By switching to an electric vehicle and not purchasing gas, he is on pace to have yearly savings in the range of $8,000.

“Electric vehicles are cheaper to own and operate,” said Sampson. “If you do the long-term calculation, not just a sticker price, they will save you money. They are also better for the environment.”

Sampson said drivers are increasingly switching to electric vehicles, and with fuel prices continuing to climb, he expects the trend to increase even more in the coming years.

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Shortages of some baby formula in Quebec due to panic buying, U.S. supply issues



MONTREAL — When Catherine Labrecque-Baker went to purchase hypoallergenic baby formula in mid-April for her six-month-old baby, her Quebec City pharmacist told her there was none left.

In response, Labrecque-Baker travelled to another pharmacy in the city and bought five times the amount she normally does. Then she started to stress as she fed her baby and watched her stockpile slowly shrink.

Her son has an intolerance to cow’s milk protein and relies on Alimentum, a product by American formula maker Abbott, which voluntarily recalled its products in February after four illnesses were reported in babies who had consumed powdered formula from its Michigan plant.

“What am I supposed to do?” Labrecque-Baker asked Monday in an interview. “I cried an entire night, wondering what will I do when I won’t have any more formula.”

The disruptions at Abbott, the United States’ largest formula maker, are causing supply issues for specific hypoallergenic formulas across Canada, according to Retail Council of Canada spokeswoman Michelle Wasylyshen.

But in Quebec, parents are noticing shortages of other formulas on the province’s pharmacy shelves — a result of panic buying, Wasylyshen said.

“There’s a ripple effect,” she said in an interview Monday, referring to parents like Labrecque-Baker who are scooping up more formula than normal because they fear it will go out of stock.

“We don’t want to see a return to panic buying — that approach doesn’t help anyone,” Wasylyshen said. “Some of our retailers have put limitations in place in terms of what customers can purchase, just to make sure there’s enough for everyone.”

Abbott’s decision to shut its Michigan plant exacerbated ongoing supply chain disruptions among formula makers, leaving fewer options on store shelves across much of the United States. The company is one of only a handful that produce the vast majority of the U.S. formula supply, so Abbott’s product recall — involving brands Similac, Alimentum and EleCare — wiped out a large segment of the market intended for babies with allergies or intolerance to cow’s milk protein.

On Monday, Abbott said it has reached an agreement with U.S. health officials to restart production at its Michigan factory, a key step toward easing a nationwide shortage.

Quebec is not facing the same kind of shortages as in the United States, but Wasylyshen said images of empty pharmacy shelves in the province started circulating online, causing anxiety.

The province’s Health Department on Monday said it’s working with Quebec’s association of pharmacy owners, the Association québécoise des pharmaciens propriétaires, to minimize the shortage’s impact.

“We are looking as far away as Europe to counter this lack of supply,” department spokesperson Marjorie Larouche said, adding that shortages are being noticed across Canada.

Marilie Beaulieu-Gravel of the pharmacy owners association said that after Abbott’s Alimentum formula disappeared from shelves, parents rushed to purchase Nutragimen, another hypoallergenic formula, made by Mead Johnson & Company.

“There isn’t a production issue with this product, but rather a domino effect,” Beaulieu-Gravel said Monday in an interview. “The demands for the products increase sharply and unexpectedly on the market.”

While Nutragimen products are expected to be back on shelves by mid-June, Beaulieu-Gravel said her association isn’t expecting the supply of Alimentum to return before the end of summer.

Meanwhile, some parents, including Labrecque-Baker, are left searching for formula everywhere, even online.

“I looked on Facebook Marketplace, on Kijiji … friends have been looking for me or giving me what they can,” Labrecque-Baker said. “This week, I spent $200 because I can’t wait and risk it. The more I can stock, the more days I can feed my child.”

This report by The Canadian Press was first published on May 17, 2022.

— With files from The Associated Press.

This story was produced with the financial assistance of the Meta and Canadian Press News Fellowship.


Virginie Ann, The Canadian Press

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