OTTAWA — The full effects of interest rate hikes have yet to be felt — and will be “even more powerful” than many anticipate, said former Bank of Canada governor Stephen Poloz Thursday in a speech about ways Canada can chart a path toward economic growth during uncertain times.
Speaking at a conference hosted by Western University’s Ivey Business School in Ottawa on Thursday, the former governor warned today’s economy is more sensitive to interest rates than it was 10 years ago.
“Does anybody here think the sensitivity of the economy to interest rate movements is less today than it was five or 10 years ago?” Poloz asked. “I think it’s more sensitive today than it was before.”
Poloz estimates annual inflation will fall to about four per cent on its own as external factors, such as higher commodity prices, ease. Statistics Canada’s most recent annual inflation rate sat at 6.9 per cent in October.
He said policy action will need to do the rest of the work to get inflation back down to the central bank’s two per cent target.
“I think that the actions that are being taken to get us there will turn out to be even more powerful than a lot of people think,” Poloz said, citing higher debt loads in the Canadian economy as a vulnerability.
The former governor is the chair of the Lawrence National Centre for Policy and Management, an independent think tank hosted at Ivey.
Poloz began his remarks by sharing his thoughts on the drivers of high inflation and where prices are headed. His speech also offered a set of recommendations on how Canada can improve long-term economic growth during volatile times.
He said the think tank will offer a summary of the recommendations to Finance Minister Chrystia Freeland next week.
Poloz finished his seven-year term as Bank of Canada governor a few months into the COVID-19 pandemic. Since then, the central bank has dramatically shifted gears from the extraordinary stimulus measures of 2020 to rapid monetary policy tightening.
The Bank of Canada began raising interest rates in March to clamp down on rising inflation. Since then, the central bank raised its key interest rate six consecutive times, embarking on one of the fastest monetary policy tightening cycles in its history.
Its key rate currently stands at 3.75 per cent and is expected to rise again next month.
The aggressive rate hikes are expected to slow the Canadian economy significantly. And though many economists are cautiously optimistic that the slowdown won’t be severe or long-lasting, labour groups in particular have been concerned about the consequences of a potential recession.
Is the Bank of Canada overshooting with its rate hikes? “It’s impossible to say,” Poloz said in an interview.
Economists estimate interest rate hikes take one to two years to take full effect in the economy. That lag makes it difficult to judge whether rate hikes are too much or too little, the former governor said.
Poloz said trying to slow inflation with interest rate hikes is like trying to stop a car with bad brakes.
“It takes a long time to actually slow down and so you stand on the brake really hard. Well, then you’re going to cause an accident too,” he said.
Though high inflation has persisted longer than the Bank of Canada’s initial projections, Poloz defended the use of the word “transitory” to describe inflation pressures, noting in his speech that international contributors to inflation such as supply chain delays are already dissipating.
“In other words, the part of inflation that is externally driven, really is transitory. It’s OK to use the word transitory,” he said.
However, the former central bank governor says it takes time for that development to be reflected in the annual inflation rate.
Bank of Canada governor Tiff Macklem notably called inflation “transitory” — meaning temporary — when it first started rising.
Since then, he’s backed away from that characterization and has emphasized that the domestic economy is overheated and inflation won’t return to target without action from the central bank.
While high inflation has come to the forefront of economic policy discussions, many economists are concerned about what Canada is — or isn’t — doing to promote long-term growth.
During his speech, Poloz made the case for government policies that promote stability and clarity for businesses. The less uncertainty there is about trade policy and projects, for example, the more businesses will invest in their operations and improve their productivity, he said.
“Clarity is the obvious antidote to uncertainty.”
This report by The Canadian Press was first published Nov. 24, 2022.
Nojoud Al Mallees, The Canadian Press
5 things to know today: Canada's 'two-faced' winter forecast – CTV News
CTV News travels to Pakistan and finds some Afghans who fled and are now homeless, a new weather forecast predicts a “two-faced” winter for many Canadians, and Alberta Premier Danielle Smith tables the controversial sovereignty act. Here’s what you need to know to start your day.
1. Refugee camp: CTV News visits a refugee camp in Pakistan, where Afghan children live in flimsy tents set up in a park, without basics like running water or ample food, with only their mothers for protection.
2. Winter forecast: Despite warm and mild temperatures stretching on throughout most of the fall season, the wrath of winter may be coming soon, experts say. But frigid temperatures aren’t expected to last.
3. Sovereignty act: Danielle Smith introduces the Sovereignty within a United Canada Act in the provincial legislature while trying to reassure Albertans that it has nothing to do with leaving the country.
4. Canada commutes: A new census release from Statistics Canada Wednesday is expected to shed light on how people got to work last year, and what kind of jobs they were doing.
5. China’s reformer: Former President Jiang Zemin, who led China out of isolation after the army crushed the Tiananmen Square pro-democracy protests in 1989 and supported economic reforms that led to a decade of explosive growth, is dead at 96.
One more thing…
Royal bill: King Charles III’s three-day tour of Canada earlier this year cost taxpayers at least $1.4 million, according to documents obtained by CTVNews.ca.
How to apply for Canada's new rental and dental benefits – CTV News
Starting on Thursday, eligible Canadians can apply through the Canada Revenue Agency to receive funding as part of the first ever federal dental-care program, and as of Dec. 12 applications will open for low-income renters looking to access the one-time top-up to the Canada Housing Benefit.
On Nov. 17 the NDP-backed Liberal affordability bill bringing in both the dental-care benefit and rental boost for lower-income Canadians—known as Bill C-31—became law. At the time, the government committed to having the application process launched before the end of the year.
On Wednesday, the federal financial agency briefed reporters on how the system will work for Canadians looking to apply for these benefits, billing the system as “streamlined and user-friendly.”
The CRA says it will only take a couple of minutes to apply, because there are some upfront verification built into the system, including checking if your 2021 tax return has been filed.
Here’s what you need to know.
WHAT IS THE “CANADA DENTAL BENEFIT”?
For now, the “Canada Dental Benefit” will be offered to children under the age of 12, with an annual family income of less than $90,000, with the amount provided per child per year dependant on family income.
- $650 would be provided per child if the family’s adjusted net income is under $70,000;
- $390 would be provided per child if the family’s adjusted net income is between $70,000 and $79,999; and
- $260 would be provided per child if the family’s adjusted net income is between $80,000 and $89,999.
The amount offered is the government’s “best calibration” of how much funding is needed to cover basic dental care—exams, cleanings, X-rays, and fillings— without much left over, according to government officials who briefed reporters on the program in September.
The first phase of dental care will provide eligible parents or guardians with “direct, up-front tax-free payments to cover dental expenses.”
This interim dental benefit is only available for two periods, and parents or caregivers can receive a maximum of two payments for each eligible child.
The first period covers expenses retroactive to Oct. 1, 2022, through to June 30, 2023. The second period will cover dental services the child received between July 1, 2023, and June 30, 2024.
If a child’s dental care costs more than $650 and the parent or guardian has only applied for one benefit period, they may meet the criteria for an additional payment.
HOW TO APPLY FOR DENTAL COVERAGE
Applicants will have two options to access the online portal: either through their CRA “My Account” or through their Service Canada account. For those without access to the online systems, the CRA is setting up a dedicated dental benefit phone line to receive applications.
Either way, those applying will have to make a series of attestations in order to determine eligibility, as well as answer security questions to verify their identity.
For example, parents or guardians making the application will have to confirm:
- Their child was born on or after Dec. 2, 2010, making them 12 years old as of Dec. 1, 2022;
- They are currently receiving the Canada Child Benefit as of Dec. 1, 2022;
- Their child does not have access to private dental care coverage nor are their costs fully covered by another dental program provided by any other level of government;
- They will have out-of-pocket dental care expenses for which they will use the benefit; and
- They have filed their 2021 income tax and benefit return.
Applicants can submit to receive this financial support ahead of appointments, but will have to provide proof of eligibility such as contact information for the dental service provider, date of the appointment, and information related to their employer and spouse or partner related to their benefit coverage.
The CRA is highly recommending signing up for direct deposit as the fastest and easiest way to receive this funding, noting that the estimated wait time for payments is five business days if signed up for direct deposit, whereas it could take 10 business days to receive a cheque by mail.
The law has also set up a process for bureaucrats to check eligibility information—including contacting employers—and there could be penalties for those who submit fraudulent claims. The CRA is encouraging those who apply to print and save a copy of their applications as well as any relevant documentation such as receipts, in case verification is needed down the line.
For example, if for some reason a parent or guardian applies for funding in the first period but does not end up having dental care expenses during that timeframe, they will be required to repay that amount and reapply for the second eligibility period.
While only those under 12 years old will get access for now, the government says it remains committed to following through on seeing this stop-gap measure become a fully-fledged national dental care plan by 2025.
WHAT ABOUT THE “CANADA HOUSING BENEFIT” TOP-UP?
A for sale sign outside a home indicates that it has been rented, in Ottawa, on Monday, March 1, 2021. THE CANADIAN PRESS/Justin Tang
The other form of federal funding that eligible Canadians can soon access is the one-time $500 top-up to the Canada Housing Benefit. The application process for this funding will launch on Monday, Dec. 12, according to the CRA.
This is a program for low-income renters with adjusted net incomes below $35,000 for families, or $20,000 for individuals who pay at least 30 per cent of their adjusted net income on rent and are paying rent for their own primary residence in Canada.
In order to receive this $500 payment to help cover rent, applicants need to confirm they:
- Have filed their 2021 income tax and benefit return;
- Are at least 15 years of age as of Dec. 1, 2022;
- Are a resident in Canada for tax purposes in 2022;
- Have their principal residence in Canada as of Dec. 1, 2022;
- Have paid rent for their own shelter in 2022; and
- Have paid at least 30 per cent of their 2021 adjusted net family income on rent in the 2022 calendar year.
Applicants need to be ready to provide some basic information such as their address, who they paid rent to and how to contact that person, as well as how many months spent at certain residences if they’ve moved throughout the year.
Same as with the dental benefit, the CRA is suggesting direct deposit as the fastest and easiest way to receive this funding. The estimated wait time for payments is five business days if signed up for direct deposit, whereas it could take 10 business days to receive a cheque by mail.
Here too, applicants will have to keep any relevant documentation to back up their application in case the CRA comes calling in the next six years to validate their eligibility. This includes tax slips, rental property receipts, and landlord contact information.
Applicants found to be ineligible will be required to repay the benefit.
Dutch man who harassed B.C. teenager Amanda Todd returned to the Netherlands
The man convicted of harassing and extorting British Columbia teenager Amanda Todd has been returned to the Netherlands, where the prosecution office says a judge will decide if he serves any of his 13-year Canadian sentences.
Canada’s Justice Department says Aydin Coban was taken back to his home country on Nov. 24, where he will continue serving a nearly 11-year sentence imposed by a Dutch court in 2017 for similar crimes involving more than 30 youths.
Coban was extradited to Canada in 2020 to face charges including extortion, harassment and distribution of child pornography related to Todd, who was 15 when she died by suicide at her home in Port Coquitlam, B.C., in October 2012.
Evert Boerstra, press officer with the Netherlands Public Prosecution Service, says a so-called “conversion hearing” will take place now that Coban has been returned, and the court will decide how his Canadian sentence will be converted to Dutch standards.
Boerstra says it will be up to a judge to decide whether Coban will serve the 13-year sentence given to him by a B.C. Supreme Court judge last month, after he finishes his Dutch sentence, which was the maximum that could be imposed.
The press officer says because of the similarity between both cases “there is a chance that after conversion there will be no room left to impose punishment in addition to the Dutch sentence as a result of the Canadian verdict.”
In an email, Boerstra says a date for that hearing has yet to be announced.
Carol Todd, Amanda’s mother, has said she knew at the start of Coban’s nine-week trial in B.C. last June that any sentence would be converted once he returned to the Netherlands.
But it wasn’t until a Dutch reporter contacted her after Coban was convicted in August that Todd said she learned it’s possible he may not serve his Canadian sentence because he was already serving the maximum Dutch term for similar crimes committed around the same time he was harassing her daughter.
Todd has said the Dutch reporter spoke with lawyers who indicatedDutch law also stipulates when someone is convicted and sentenced, then found guilty of the same kind of offence in the same time period, the existing punishment applies.
Todd reached out to Crown prosecutors in B.C. after the publication of the Dutch journalist’s story and they verified that was the law, she said in a recent interview.
During Coban’s trial in New Westminster, B.C., the jury heard he used 22 online aliases to harass Amanda over two years, starting when she was 12 years old.
The trial heard Coban sent photos to Amanda’s family, friends and school administrators of her exposing her breasts because she didn’t comply with his demands to perform sexual “shows” in front of a web camera.
The teenager died by suicide a few weeks after posting a video in which she used flash cards to describe being tormented by an online predator.
Todd said her daughter would have turned 26 over the weekend.
This report by The Canadian Press was first published Nov. 29, 2022.
Brenna Owen, The Canadian Press
Canada coach John Herdman disputes Croatian counterpart's account of skipped post-match handshake – The Globe and Mail
DoorDash laying off 1,250 people, about 6% of its workforce – CBC News
Social media tools were key to 'Freedom Convoy' protest, expert tells inquiry – CBC News
Silver investment demand jumped 12% in 2019
Iran anticipates renewed protests amid social media shutdown
Search for life on Mars accelerates as new bodies of water found below planet’s surface
Investment14 hours ago
Clinton Orr, Canaccord Genuity, earns Canada’s Top Wealth Advisor award
Sports16 hours ago
Protester with rainbow flag banned from World Cup matches
Science17 hours ago
In Somalia Meteorite, Scientists Discover 2 Minerals Never-Before-Seen On Earth
Business16 hours ago
Oil Prices Jump On Major Crude Draw
Tech17 hours ago
Xiaomi 13 Pro camera detailed with a 1-inch main sensor, floating telephoto lens
News10 hours ago
Educated immigrants face underemployment as Canada leads G7 in educated workforce
Real eState17 hours ago
Real estate industry braces for foreign buyer ban
Investment17 hours ago
Foreign investment in Latin America still below pre-pandemic levels