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.
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.
