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Consumer price index has economists predicting more rate hikes

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With the latest inflation data showing no signs of a substantial cool-down, economists are forecasting the Bank of Canada will continue its reign of aggressive rate hikes, and some predict a “technical recession” during the first half of 2023.

Data released by Statistics Canada on Wednesday indicates that the consumer price index (CPI) is up 6.9 per cent year-over-year in September, despite economists previously anticipating a mere 6.7 per cent increase.

In an interview with BNN Bloomberg on Tuesday, Jean-Francois Perrault, chief economist at Scotiabank, said “there’s a limit to how much [the Canadian economy] can withstand.”

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“You’ve got the pretty horrible situation in Europe. Obviously, China is going through a very significant slowdown — perhaps so significant that they decided yesterday not to publish economic data for a little while. And we got the U.S. where things are slowing and the Feds indicated that they want to raise interest rates quite a bit more and that will lead to a recession there.”

Perrault said that these economic pressure points make it increasingly more difficult for Canada to withstand recession fears, but he also pointed out that there is still a fair amount of resilience throughout various sectors of the economy.

“You can think of it as the economy kind of taking a breather for a few quarters,” he said. “The Bank of Canada is trying to engineer a cooling of the economy. It’s trying to slow inflation. So this slowdown that’s occurring is consistent with that, and hopefully helpful from an inflation management perspective as we look to inflation over the next year and a half.”

Here’s what other economists are saying about the recent inflation data and what is expected from the Bank of Canada as we approach 2023.

BANK OF MONTREAL

Bank of Montreal Chief Economist Douglas Porter said in a note to clients Wednesday that inflation did not ease as much as anticipated last month, “even as gasoline costs took a big step back.”

“Underlying inflation remains extremely persistent and sticky at above 5 per cent.”

He added that a weak Canadian dollar and a likely 75 basis-point hike from the U.S. Federal Reserve at its next meeting pave the way for a 75 basis-point hike.

TORONTO-DOMINION BANK

Leslie Preston, a senior economist and managing director at TD Bank, said in a release Wednesday that increases in the policy rate are starting to impact the economy. Inflation data, she said, emphasizes the need for a hefty 50 basis-point hike next week in the BoC’s overnight rate.

“We expect the bank is getting closer to a pause on rate hikes, once it reaches four per cent by the end of the year,” Preston said.

THE BANK OF NOVA SCOTIA

Derek Holt, a vice-president and head of capital markets economics at Scotiabank, anticipates the Bank of Canada to increase its policy rate by another 75 points next week, as he said in a note to investors Wednesday. He also mentioned that he had been supporting a 75 basis-point hike before the release of CPI figures.

“[Overnight index swap] pricing for next week’s BoC decision has moved from pre-data pricing around 60 bps to over 75 bps now as a three-quarters of a percentage point rate hike is now fully priced,” Holt said.

CANADIAN IMPERIAL BANK OF COMMERCE

Benjamin Tal, the deputy chief economist at CIBC, said in an email to BNN Bloomberg on Wednesday that he predicts a 75 basis-point hike from the central bank.

Karyne Charbonneau, an economist at CIBC, said in a note to investors Wednesday that the central bank continues to have “work to do” in its fight to effectively combat inflation.

“As such, we now believe the Bank will need to go with a 75 bps hike next week rather than the 50 bps we previously anticipated. The Bank might then be left with a last 25 bps in December if growth numbers support it,” Charbonneau noted.

With files from Daniel Johnson 

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Conservatives are ‘fearmongering’ over assault-style gun ban: public safety minister

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OTTAWA — Public Safety Minister Marco Mendicino accuses the Conservatives of “whipping up fear” that the Liberal government is outlawing ordinary long guns and hunting rifles.

In an interview, Mendicino says the government only wants to reinforce a regulatory ban on assault-style firearms like the AR-15 by enshrining a definition in legislation, and it is prepared to work with MPs to get it right.

He insists the government has no intention whatsoever of going after everyday long guns and hunting rifles, calling the notion “Conservative fearmongering.”

In May 2020, the Liberal government announced a ban through order-in-council on over 1,500 models and variants of what it considers assault-style firearms, such as the AR-15 and the Ruger Mini-14.

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The Liberals recently proposed including an evergreen definition of a prohibited assault-style firearm in gun-control legislation being studied by a House of Commons committee.

The Conservatives claim the government’s amendment amounts to the most significant hunting rifle ban in the history of Canada.

This report by The Canadian Press was first published Nov. 28, 2022.

 

The Canadian Press

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Joly seeks reprimand of Russian ambassador as embassy tweets against LGBTQ community

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OTTAWA — Foreign Affairs Minister Mélanie Joly has asked her department to summon Russia’s ambassador over social media postings against LGBTQ people.

In recent days, Russia’s embassy in Ottawa has posted on Twitter and Telegram that the West is imposing on Russia’s family values, and arguing that families can only involve a man, a woman and children.

The embassy has posted images of a crossed-out rainbow flag and Orthodox icons of Adam and Eve.

The tweets came as Russia expanded a ban on exposing children to so-called homosexual propaganda, meaning authorities can now prosecute Russians for doing things they argue might entice adults to be gay or transgender.

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Joly’s office says the posts amount to “hateful propaganda” that must be called out and “an attack on the Canadian values of acceptance and tolerance.”

If Global Affairs Canada follows Joly’s request, it will be the third time the department has summoned ambassador Oleg Stepanov this year.

This report by The Canadian Press was first published Nov. 28, 2022.

 

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Work hard and never give up, Michelle O’Bonsawin says during Supreme Court welcome

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OTTAWA — The newest member of the Supreme Court of Canada says her journey has not been an easy one, but it has been meaningful and rewarding.

Members of the legal community and Michelle O’Bonsawin’s fellow judges welcomed her to the bench in a ceremony today.

O’Bonsawin, who replaced the retiring Michael Moldaver on Sept. 1, is a bilingual Franco-Ontarian and an Abenaki member of the Odanak First Nation.

O’Bonsawin says she is a big believer that if a person has a goal, works hard and never gives up, they can achieve their dreams.

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She adds that while she has made mistakes and fallen down, those missteps have been her teacher.

Richard Wagner, the chief justice of Canada, praises O’Bonsawin’s generosity and volunteer activities, noting she shares his passion for open courts, access to justice and education.

This report by The Canadian Press was first published Nov. 28, 2022.

 

The Canadian Press

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