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Inflation: Rate to remain high all year, BoC governor says – CTV News

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2 years ago

July 21, 2022

As Canadians continue to feel the squeeze from an increased cost of living, Bank of Canada Governor Tiff Macklem says Canada’s inflation rate is set to remain “painfully high” for the rest of the year.

On Wednesday, Statistics Canada reported the country’s annual inflation rate rose to 8.1 per cent in June, up from 7.7 per cent in May, marking the largest yearly change since January 1983.

In an exclusive interview with CTV News’ Evan Solomon, Macklem said the inflation rate is “unfortunately… probably going to start with a seven for the rest of the year.”

“It is going to be painfully high,” Macklem said Wednesday.

Last month’s inflation rate increase was mainly attributed to higher gasoline prices. In the interview, Macklem said gas prices have since come down and so he expects in a month from now, when the national statistics agency publishes its July inflation data, the rate “probably will come down a bit.”

However, Macklem said demand is running ahead of the economy’s ability to produce the goods people want, which will continue to create inflationary pressures.

In response to higher than expected inflation, on July 13 the Bank of Canada hiked its overnight interest rate by 100 basis points to 2.5 per cent. It was the biggest rate hike by the central bank since August 1998.

The next rate decision from the Bank of Canada is set for Sept. 7, following the scheduled Aug. 16 StatCan release of its July inflation report.

In the interview, Macklem said that while getting inflation back to the two per cent target is paramount, he’s anticipating increasing the policy rate again “pretty quickly.”

“We are deliberately front-loading our interest rate response. We want to get ahead of this,” he said. “Inflation is going to come down.”

Macklem said that while he doesn’t think a recession is on the horizon, Canada’s path to a “soft” economic landing is “narrowing.”

“Looking back, if we knew last year everything that we knew today, yes, I think we probably would have begun raising interest rates earlier,” Macklem said when asked whether he thinks the credibility of the Bank of Canada has been hurt given its handling of inflation.

Below is a full transcript of the interview with Evan Solomon, host of CTV News Channel’s Power Play and CTV’s Question Period. The transcript has been edited for clarity.

Evan Solomon: Inflation hit a 39-year high – 8.1 per cent – is this the peak and if not, how high will you raise rates to combat it?

Tiff Macklem: “Evan look, there’s no way around it: 8.1 per cent inflation is painfully high. We do expect—we know gasoline prices came down in July, so a month from now when StatCan publishes July inflation [data] it probably will come down a bit. But look, unfortunately inflation is probably going to start with a seven for the rest of the year. It is going to be painfully high.

“The simple reality is demand in the economy is running ahead of the economy’s ability to produce the goods people want, and that’s creating inflationary pressures. You asked where do interest rates have to go? Look, last week we took a big step, we raised our policy interest rate by 100 basis points. That got us into what we call the long run neutral range… We are deliberately front-loading our interest rate response. We want to get ahead of this. The best chance of getting that soft recovery is to front-load the policy response.

“That does argue for increasing the policy rate again, probably something around the top of that 2 to 3 per cent range, or a little bit over and doing that pretty quickly. Where interest rates ultimately have to go? Well that is going to depend on the evolution of the economy, and importantly the evolution of inflation. Getting inflation back to our 2 per cent target is paramount.”

Evan Solomon: So you’re talking about three [per cent], or more than three [per cent] in the next major rate hike by September, so people have to brace for that. Why not, if you know that’s coming, why didn’t you raise the rates more quickly now, to kind of put the brakes on inflation right now and stop the pain earlier?

Tiff Macklem: “Well, we did take a very big step last week. We raised our interest rate by 100 basis points. We haven’t done that in a long time. And we have been raising very rapidly, we are front-loading this response. Exactly as you said, we want to get ahead of this.

“We need to moderate demand, give supply time to catch up, and take some steam out of inflation. And by front-loading, that gives us the best chance of the soft landing. Our objective is to get inflation back to control with a soft landing. We’re going to take our decisions based on the best available information at each of the decision dates going forward.

“We are very focused on getting inflation back to 2 per cent.”

Evan Solomon: I know you’re saying you are getting ahead of it. Some worry that we’re behind it. Governor, is Canada headed for a recession?

Tiff Macklem: “We’re not projecting a recession. We are projecting that growth is going to slow materially, quite a bit. We’re forecasting 3.5 per cent growth for this year, 1.75 per cent for next year. That’s a pretty marked slowing. People are going to feel that, there will be some pain… What we’re trying to do, is the economy is in excess demand, it is overheated. We need to get rid of the excess. We need to cool it so that it’s not overheated. We don’t want to over cool it, and there’s some good reasons why we think that’s possible.

“Right now, there are over a million vacancies, unfilled jobs in this country. There’s a lot of scope to reduce those vacancies, moderate demand, reduce those vacancies without materially reducing employment or materially increasing unemployment.

“So we do think there’s a path to a soft landing, but I will be very frank, that path is narrowing. With inflation at 8.1 per cent, with inflation broadening, with inflation persisting, that path is narrowing, and really that gets back to why we front-loaded our decision.”

Evan Solomon: What’s your message to Canadians who are scared and seeing no relief in sight?

Tiff Macklem: “My message to Canadians really is twofold Evan. First of all, inflation has come up very quickly, as recently as March of last year it was 2.2 per cent. It has come up very quickly. It is not going to stay this high. Inflation is going to come down. Canadians can be assured that inflation will come down. The other thing I want to say though is look, we understand it’s a bit counterintuitive. We’re raising interest rates, that’s increasing the cost of borrowing at the same time that Canadians are paying more for gas, more for groceries, more for many everyday items.

“But it is by increasing the cost of borrowing that we will actually slow spending, slow demand, give the economy a chance to catch up and take some of the steam out of inflation. So I understand there is some short run pain here, but it’s worth it to get price changes back to normal.

“Canadians need to get some predictability back. They shouldn’t have to worry, you know, what the cost of living is going to be next month, next year. We are determined to get inflation back to our target.”

Evan Solomon: You have been the target of a lot of criticism for the inflation crisis, did you make a mistake not raising rates earlier – a mistake that is costing the bank credibility?

Tiff Macklem: “The Canadian economy has been through a lot in the last couple of years. We’ve had the deepest recession, the fastest recovery. There is now a brutal war in Europe—Russia’s attack on Ukraine. All our decisions through this period have been based on the best available information at the time we took the decision.

“Look, you know looking back, if we knew last year everything that we knew today, yes I think we probably would have begun raising interest rates earlier. But we didn’t. I mean, last summer, unemployment was about 7.5 per cent. There was still a lot of slack in the economy. We were still dealing with waves of the virus, shutdowns.

“You’ll remember in January, Omicron hit us hard, there was a new wave of shutdowns. But you know, we ended our QE last October–quantitative easing—we signalled in January that Canadians should expect higher interest rates, we began raising in March, we’ve raised 2.25 percentage points since then.

“We’re doing that to get ahead of this. The excess demand we’re seeing, the overheating of the economy, it is relatively recent. And by moving forcefully, we’re doing two things: We’re going to get, as I’ve said before, get demand more in line with supply. And the other part is keep those inflation expectations well anchored on the target.

“Our credibility is being tested, and that was an important reason why we took an unusually large step last week to send a clear message to Canadians that they can be assured that we’re going to control inflation.”

Evan Solomon: Is it fair to say to consumers today, ‘Folks, it’s bad but you have now reached peak inflation?’ Is this peak inflation?

Tiff Macklem: “Look, as I said earlier Evan, we do expect it’s going to come down when we get the July number a month from now. When you filled up your gas tank in June you were probably paying a little over $2 a litre, in July it’s more like $1.80 something, so that alone will probably pull inflation down a bit in July. But inflation is going to remain painfully high for a number of months to come. Monetary policy does work, though. It’s going to take some time to work through the economy, but it does work. And particularly as we get into next year, Canadians will see inflation coming down.”

Evan Solomon: Governor Macklem, I really appreciate your time today. Thank you so much. Appreciate it.

Tiff Macklem: “It’s a pleasure Evan, thank you.”

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With grief lingering, Blue Jackets GM Waddell places focus on hockey in wake of Gaudreau’s death

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6 hours ago

September 16, 2024

Anne Joseph

BUFFALO, N.Y. (AP) — Hearing the familiar sounds of clacking sticks and pucks banging off the boards and glass while watching Columbus Blue Jackets prospects from the stands of a cold rink on a warm late-summer afternoon was not enough to wash away the lingering residuals of grief for Don Waddell on Saturday.

That, the Blue Jackets’ general manager acknowledged, will take more time than anyone can guess — weeks, months, perhaps an entire season and beyond.

What mattered is how spending the weekend attending the Sabres Prospects Challenge represented a start to what Waddell called among the first steps in refocusing on hockey and the future in the aftermath of the deaths of Columbus star Johnny Gaudreau and his brother, Matthew, who were struck by a suspected drunken driver while riding bicycles on Aug 29.

“We got to play hockey,” Waddell said. “We’re not going to forget about Johnny and his family, the Gaudreau family.”

He then reflected on the speech Johnny Gaudreau’s wife, Meredith, made during the brothers’ funeral on Monday, by urging those in mourning to move forward as she will while focusing on raising their children.

“Everybody knows that Johnny wants them to play hockey,” Waddell said. “And everybody’s rallying around that.”

The resumption of hockey in Columbus began last week, when most Blue Jackets players returned to their facility to be together and lean on each other at the urging of Waddell and team captain Boone Jenner. And it will continue on Thursday, when the team opens training camp, exactly three weeks since the Gaudreaus were killed.

“Tragic. Senseless. But now we got to focus on trying to get our team ready to play hockey this year,” Waddell said. “We all mourn and heal differently, but I think as a team being together like that is going to be critical for them to get moving forward.”

Tragedy is no stranger to Waddell or the Blue Jackets.

Waddell was general manager of the then-Atlanta Thrashers in 2003 when Dany Heatley lost control of his car and struck a wall, with the crash killing passenger and teammate Dan Snyder. In 2021, Blue Jackets goalie Matiss Kivlenieks died during a July Fourth fireworks accident.

Waddell placed the emphasis on himself and coach Dean Evason — both newcomers to Columbus this offseason — to guide the team through what will be an emotional season.

“Now, do I think there’s going to be some dark days? I won’t be surprised,” Waddell said.

Reminders of the Gaudreaus’ deaths remain apparent, and reflected in Buffalo on Friday night. A moment of silence was held in tribute to the brothers before the opening faceoff of a game between the Blue Jackets and Sabres.

Afterward, Columbus prospect Gavin Brindley recalled the times he spent with Johnny Gaudreau in Columbus and as teammates representing the United States at the world hockey championships in the Czech Republic in May.

“He was one of the biggest mentors for me at the world championships,” Brindley said. “I couldn’t tell you how many times we hung out with Meredith, pictures on my phone. It’s just so hard to look back and see that kind of stuff.”

The NHL and NHL Players’ Association are providing the Blue Jackets help in the form of grief counseling, crowd security at vigils and addressing hockey issues, such as potentially altering the league’s salary cap rules to provide Columbus relief from having to reach the NHL minimum payroll because of the void left by Gaudreau’s contract.

“The Blue Jackets, I don’t think anybody’s focused from an organizational standpoint, from a hockey standpoint as to what comes next, because I think everybody’s still in shock,” NHL Commissioner Gary Bettman told The Associated Press last week. “I don’t think anybody’s focused right now other than on the grieving part, which is understandable.”

Much of the burden has fallen to Waddell, who has been in discussions with the NHL and the NHLPA and dealing with outreach programs with the Blue Jackets’ partner OhioHealth, while also overseeing preparations for training camp and gauging his prospects in Buffalo.

There’s also his roster to attend to, which he said has two openings at forward, one involving Justin Danforth, who may miss the start of the season because of a wrist injury. Waddell didn’t have to mention the second opening.

Tiring and emotional as it’s been, Waddell found comfort being in his element, a rink, and looking ahead to the start of training camp.

“The guys are in really good shape. We’ve done a lot of testing already and they’re eager to get going,” Waddell said. “We have a reason to play for. And we’ll make the best of it.”

The Blue Jackets later Sunday signed veteran winger James van Riemsdyk to a one-year contract worth $900,000.

“James van Riemsdyk has been a very consistent, productive player throughout his career,” Waddell said. “Bringing him to Columbus will not only provide depth to our group up front, but also valuable leadership and another veteran presence in our dressing room.”

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AP Hockey Writer Stephen Whyno in New York contributed to this report.

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PSG says defender Nuno Mendes target of racial abuse after a French league game

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6 hours ago

September 16, 2024

Anne Joseph

PARIS (AP) — Paris Saint-Germain defender Nuno Mendes was the target of abusive and racist comments on social media after a French league game.

The club condemned the abuse and expressed its “full support” Sunday for the Portugal left back, who was targeted following PSG’s 3-1 win against Brest on Saturday.

Mendes, who is Black, shared on his Instagram account a racist message he received.

During the match, Mendes brought down Ludovic Ajorque in the box for a penalty that Romain Del Castillo converted to give Brest the lead.

“Paris Saint-Germain doesn’t tolerate racism, antisemitism or any other form of discrimination,” the club said. “The racial insults directed at Nuno Mendes are totally unacceptable … we are working with the relevant authorities and associations to ensure those responsible are held accountable for their actions.”

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Slovenia’s Tadej Pogacar wins Grand Prix Cycliste de Montreal

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6 hours ago

September 16, 2024

Anne Joseph

MONTREAL – Tadej Pogacar was so dominant on Sunday, Canada’s Michael Woods called it a race for second.

Pogacar, a three-time Tour de France champion from Slovenia, pedalled to a resounding victory at the Grand Prix Cycliste de Montreal.

The UAE Team Emirates leader crossed the finish line 24 seconds ahead of Spain’s Pello Bilbao of Bahrain — Victorious to win the demanding 209.1-kilometre race on a sunny, 28 C day in Montreal. France’s Julian Alaphilippe of Soudal Quick-Step was third.

“He’s the greatest rider of all time, he’s a formidable opponent,” said Woods, who finished 45 seconds behind the leader in eighth. “If you’re not at your very, very best, then you can forget racing with him, and today was kind of representative of that.

“He’s at such a different level that if you follow him, it can be lights out.”

Pogacar slowed down before the last turn to celebrate with the crowd, high-five fans on Avenue du Parc and cruise past the finish line with his arms in the air after more than five hours on the bike.

The 25-year-old joined Belgium’s Greg Van Avermaet as the only multi-time winners in Montreal after claiming the race in 2022. He also redeemed a seventh-place finish at the Quebec City Grand Prix on Friday.

“I was disappointed, because I had such good legs that I didn’t do better than seventh,” Pogacar said. “To bounce back after seventh to victory here, it’s just an incredible feeling.”

It’s Pogacar’s latest win in a dominant year that includes victories at the Tour de France and Giro d’Italia.

Ottawa’s Woods (Israel Premier-Tech) tied a career-best in front of the home crowd in Montreal, but hoped for more after claiming a stage at the Spanish Vuelta two weeks ago.

“I wanted a better result,” the 37-year-old rider said. “My goal was a podium, but at the same time I’m happy with the performance. In bike racing, you can’t always get the result you want and I felt like I raced really well, I animated the race, I felt like I was up there.”

Pogacar completed the 17 climbs up and down Mount Royal near downtown in five hours 28 minutes 15 seconds.

He made his move with 23.3 kilometres to go, leaving the peloton in his dust as he pedalled into the lead — one he never relinquished.

Bilbao, Alaphilippe, Alex Aranburu (Movistar Team) and Bart Lemmen (Visma–Lease) chased in a group behind him, with Bilbao ultimately separating himself from the pack. But he never came close to catching Pogacar, who built a 35-second lead with one lap left to go.

“It was still a really hard race today, but the team was on point,” Pogacar said. “We did really how we planned, and the race situation was good for us. We make it hard in the last final laps, and they set me up for a (takeover) two laps to go, and it was all perfect.”

Ottawa’s Derek Gee, who placed ninth in this year’s Tour de France, finished 48th in Montreal, and called it a “hard day” in the heat.

“I think everyone knows when you see Tadej on the start line that it’s just going to be full gas,” Gee said.

Israel Premier-Tech teammate Hugo Houle of Sainte-Perpétue, Que., was 51st.

Houle said he heard Pogacar inform his teammates on the radio that he was ready to attack with two laps left in the race.

“I said then, well, clearly it’s over for me,” Houle said. “You see, cycling isn’t that complicated.”

Australia’s Michael Matthews won the Quebec City GP for a record third time on Friday, but did not finish in Montreal. The two races are the only North American events on the UCI World Tour.

Michael Leonard of Oakville, Ont., and Gil Gelders and Dries De Bondt of Belgium broke away from the peloton during the second lap. Leonard led the majority of the race before losing pace with 45 kilometres to go.

Only 89 of 169 riders from 24 teams — including the Canadian national team — completed the gruelling race that features 4,573 metres in total altitude.

Next up, the riders will head to the world championships in Zurich, Switzerland from Sept. 21 to 29.

Pogacar will try to join Eddy Merckx (1974) and Stephen Roche (1987) as the only men to win three major titles in a season — known as the Triple Crown.

“Today gave me a lot of confidence, motivation,” Pogacar said. “I think we are ready for world championships.”

This report by The Canadian Press was first published Sept. 15, 2024.

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