Persistent strength in the economy means interest rates may have to stay higher for longer to rein in inflation, Bank of Canada deputy governor Paul Beaudry said June 8 when he delivered the central bank’s latest economic progress report.
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Interest rates are likely to stay higher for longer, says Bank of Canada deputy Paul Beaudry
“The accumulation of evidence — across a range of economic indicators — suggests that excess demand in the Canadian economy is more persistent than we thought, and this increases the risk that the decline in inflation could stall,” Beaudry said during a speech before the Greater Victoria Chamber of Commerce. “That’s why we decided to raise the policy rate.”
Beaudry added that Canadians may have to get ready for a higher interest rate environment for longer to bring cost pressures back down to the Bank of Canada’s target of two per cent. He noted his goal was to help Canadians become better-equipped in case the country enters a “new era of structurally higher interest rates.” He warned that the recent tremors in the global banking sector were an example of poor planning in the face of higher rates.
In its June meeting, the Bank of Canada raised rates by a quarter of a point, bringing the trend-setting policy rate to 4.75 per cent. The governing council cited stubbornly high inflation that re-accelerated in the latest reading, a resilient Canadian economy and robust labour market as the key factors informing the move to raise rates again.
It was the first hike since January and put an abrupt end to the pause the central bank undertook to see how data unfolded. Economists argued that it could open to door to further rate hikes throughout the rest of the year, with some expecting another hike as early as the next policy meeting in July.
Beaudry didn’t give any hints on whether these economists were right nor did he offer many clues on where interest rates could go for the rest of the year. He also addressed the neutral rate, the theoretical rate at which the central bank and economists estimate that borrowing costs would be neither impeding nor encouraging economic growth, and said the central bank’s most recent analysis suggests this rate hasn’t drifted much from its pre-pandemic range — for now.
This detail caught the eye of Royce Mendes, head of macro strategy at Desjardins, who said it confirms that policymakers may now feel “the current stance of policy is not as restrictive as the central bank initially believed.”
Mendes added that his team maintains there will be another hike at the Bank of Canada’s next policy meeting on July 12 and that the bank will wait until then to outline more specific guidance on where rates could be heading.
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CALGARY – TC Energy Corp. has lowered the estimated cost of its Southeast Gateway pipeline project in Mexico.
It says it now expects the project to cost between US$3.9 billion and US$4.1 billion compared with its original estimate of US$4.5 billion.
The change came as the company reported a third-quarter profit attributable to common shareholders of C$1.46 billion or $1.40 per share compared with a loss of C$197 million or 19 cents per share in the same quarter last year.
Revenue for the quarter ended Sept. 30 totalled C$4.08 billion, up from C$3.94 billion in the third quarter of 2023.
TC Energy says its comparable earnings for its latest quarter amounted to C$1.03 per share compared with C$1.00 per share a year earlier.
The average analyst estimate had been for a profit of 95 cents per share, according to LSEG Data & Analytics.
This report by The Canadian Press was first published Nov. 7, 2024.
Companies in this story: (TSX:TRP)
The Canadian Press. All rights reserved.
BCE Inc. reported a loss in its latest quarter as it recorded $2.11 billion in asset impairment charges, mainly related to Bell Media’s TV and radio properties.
The company says its net loss attributable to common shareholders amounted to $1.24 billion or $1.36 per share for the quarter ended Sept. 30 compared with a profit of $640 million or 70 cents per share a year earlier.
On an adjusted basis, BCE says it earned 75 cents per share in its latest quarter compared with an adjusted profit of 81 cents per share in the same quarter last year.
“Bell’s results for the third quarter demonstrate that we are disciplined in our pursuit of profitable growth in an intensely competitive environment,” BCE chief executive Mirko Bibic said in a statement.
“Our focus this quarter, and throughout 2024, has been to attract higher-margin subscribers and reduce costs to help offset short-term revenue impacts from sustained competitive pricing pressures, slow economic growth and a media advertising market that is in transition.”
Operating revenue for the quarter totalled $5.97 billion, down from $6.08 billion in its third quarter of 2023.
BCE also said it now expects its revenue for 2024 to fall about 1.5 per cent compared with earlier guidance for an increase of zero to four per cent.
The company says the change comes as it faces lower-than-anticipated wireless product revenue and sustained pressure on wireless prices.
BCE added 33,111 net postpaid mobile phone subscribers, down 76.8 per cent from the same period last year, which was the company’s second-best performance on the metric since 2010.
It says the drop was driven by higher customer churn — a measure of subscribers who cancelled their service — amid greater competitive activity and promotional offer intensity. BCE’s monthly churn rate for the category was 1.28 per cent, up from 1.1 per cent during its previous third quarter.
The company also saw 11.6 per cent fewer gross subscriber activations “due to more targeted promotional offers and mobile device discounting compared to last year.”
Bell’s wireless mobile phone average revenue per user was $58.26, down 3.4 per cent from $60.28 in the third quarter of the prior year.
This report by The Canadian Press was first published Nov. 7, 2024.
Companies in this story: (TSX:BCE)
The Canadian Press. All rights reserved.
TORONTO – Canada Goose Holdings Inc. trimmed its financial guidance as it reported its second-quarter revenue fell compared with a year ago.
The luxury clothing company says revenue for the quarter ended Sept. 29 totalled $267.8 million, down from $281.1 million in the same quarter last year.
Net income attributable to shareholders amounted to $5.4 million or six cents per diluted share, up from $3.9 million or four cents per diluted share a year earlier.
On an adjusted basis, Canada Goose says it earned five cents per diluted share in its latest quarter compared with an adjusted profit of 16 cents per diluted share a year earlier.
In its outlook, Canada Goose says it now expects total revenue for its full financial year to show a low-single-digit percentage decrease to low-single-digit percentage increase compared with earlier guidance for a low-single-digit increase.
It also says it now expects its adjusted net income per diluted share to show a mid-single-digit percentage increase compared with earlier guidance for a percentage increase in the mid-teens.
This report by The Canadian Press was first published Nov. 7, 2024.
Companies in this story: (TSX:GOOS)
The Canadian Press. All rights reserved.
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