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Several Fed policymakers see more easing ahead to help brace economy – Reuters Canada



(Reuters) – Several Federal Reserve policymakers say the U.S. central bank may need to ease monetary policy further to help nurse the economy through the coronavirus pandemic, minutes from their policy meeting last month showed on Wednesday.

FILE PHOTO: Flags fly over the Federal Reserve Headquarters on a windy day in Washington, U.S., May 26, 2017. REUTERS/Kevin Lamarque/File Photo

The Fed has already slashed interest rates to zero and bought trillions of dollars of bonds in response to the economic crisis spurred by virus, moves which have provided a boost to jobs and spending.

But, according to the readout of the July 28-29 policy meeting, members of the rate-setting Federal Open Market Committee saw the rebound in employment already slowing and additional “substantial improvement” hinging on a “broad and sustained” reopening of business activity.

Since last month, the number of new daily coronavirus infections has dropped, but is still averaging around 50,000, slowing business reopenings and, in some parts of the country, forcing schools to delay, reverse, or abandon plans to conduct in-person classes.

“Noting the increase in uncertainty about the economic outlook over the intermeeting period, several participants suggested that additional accommodation could be required to promote economic recovery and return inflation to the Committee’s 2% objective,” the minutes from the meeting said.

Policymakers last month discussed a range of possible approaches that could be appropriate “at some point,” including promising to keep interest rates low until certain economic benchmarks are met, or until a particular future date. The Fed used both options effectively during the last recession.

In what would be a novel approach for the Fed, policymakers also expressed little support for adopting caps or targets for Treasury yields. “Many participants judged that yield caps and targets were not warranted in the current environment but should remain an option” for the future, the minutes said.

The apparent swearing-off of pursuing a form of Treasury yield curve control did not go down well in the Treasury market. Yields on 30-year bonds and 10-year notes both rose notably.

“It seems the market is quite displeased with the discussion about yield curve control specifically,” said Tom Simons, a money market economist at Jefferies in New York.


The minutes also showed policymakers were nearing agreement on changes to the Fed’s policy framework, including its periodic “Statement of Longer-run Goals and Monetary Policy Strategy,” that could result in the U.S. central bank sticking with aggressive stimulus measures far longer than under its previous rubric.

Fed officials “agreed that … refining the statement could be helpful in increasing the transparency and accountability of monetary policy,” the minutes reported.

“Participants noted that the Statement on Longer-Run Goals and Monetary Policy Strategy serves as the foundation for the Committee’s policy actions and that it would be important to finalize all changes to the statement in the near future.”

Policymakers decided to revamp their policy approach in late 2018, when they worried that low inflation and low interest rates globally would mean they would need stronger tools than before to combat future recessions.

That was well before the pandemic ended a record-long period of growth and sent the world’s biggest economy into its sharpest downturn since the 1930s.

At the current juncture, with the U.S. unemployment rate at 10.2%, drastic cuts this month in government aid to households and businesses, and the virus continuing to spread, changing the Fed’s overarching framework may have little short-term impact on policy.

But it could signal the Fed’s readiness to keep its foot on the monetary gas pedal, and perhaps to take even more aggressive action ahead.

At the July policy meeting, all 17 policymakers supported leaving the target range for short-term rates between 0% and 0.25%, the minutes showed.

They also said the outlook for the economy hinged on the outlook for the virus, which has now killed more than 171,000 people in the United States, according to a Reuters tally.

And a number of participants said that since many provisions of the government’s massive late-March coronavirus rescue package are due to expire while the labor market is still weak, “additional fiscal aid would likely be important for supporting vulnerable families, and thus the economy more broadly, in the period ahead.”

Reporting by Jonnelle Marte, Ann Saphir and Howard Schneider; Additional reporting by Karen Brettell and Karen Pierog; Editing by Paul Simao

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U.S. housing market to remain a bright spot in a weak economy –



By Hari Kishan and Richa Rebello

BENGALURU (Reuters) – U.S. house prices will continue to surge well into next year and beyond, outpacing inflation and the overall economy, a Reuters poll of property analysts found, making it a bright spot against an otherwise gloomy economic backdrop.

In a stark reversal, the U.S. housing market – at the epicenter of the global financial crisis more than a decade ago – was expected to extend a helping hand to an economy severely battered by the coronavirus pandemic.

Buoyed by record-low interest rates and strong pent-up demand from a segment of the workforce largely unaffected by pandemic-induced job cuts, house prices will continue to rise over the next two years, the Sept. 15-29 poll of over 40 analysts showed.

U.S. house prices were predicted to rise 4.0% this year and by an average 3.5% in 2021 and 2022. That suggests the trend since 2013 of house price rises outpacing consumer inflation would continue for the next three years at least, according to current inflation expectations. [ECILT/US]

Underscoring the view that the latest data showing a surge in house prices was not just a blip, over 60% of analysts, or 24 of 39 who responded to an additional question, said that trend would continue to hold for at least another year. The remaining 15 said less than a year.

“Three factors support relatively high home prices – undersupply after a decade of underbuilding, single-family housing attractiveness in a socially distancing world, and most importantly low interest rates,” said Nathaniel Karp, chief U.S. economist at BBVA.

“However, economic uncertainty remains elevated and the recovery after the pandemic could take time, which are the risks to the current valuations.”

U.S. house prices outlook:

Already tight inventory levels have been squeezed to record lows after construction activity came to a grinding halt because of the coronavirus pandemic, and with no policy relief expected, home buyers may outbid each other and crank up prices.

Existing home sales reached a seasonally adjusted annual rate of 6 million units in August, the highest since the tail end of the previous housing boom in 2006, and were expected to average around 5.5 million units in the coming year.

“A surge in demand has put further strain on an already tight inventory. The latest supply of existing homes dropped below three months (of inventory) for the first time since records began in 1982, and that implies sales will ease back toward the end of the year,” said Matthew Pointon, property economist at Capital Economics.

When asked to rate the affordability on a scale of 1 to 10, with 1 as extremely cheap and 10 as very expensive, the poll gave a median of 7, up from 6 in the previous poll when predictions were for house prices to rise at a slower pace than currently expected.

“U.S. home prices are not yet at a level that is concerning,” said Matthew Gardner, chief economist at Windermere Real Estate. “That said, we need significant growth in the number of new homes built to meet current demand. If more units are not provided, we could see unsustainable upward price pressure in the resale market.”

(Reporting by Hari Kishan; Additional reporting and polling by Richa Rebello and Tushar Goenka; Editing by Ross Finley and Andrea Ricci)

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Ontario Regional Chief RoseAnne Archibald weighs in on rebuilding Canada's economy –



Last week’s speech from the throne was a chance for the federal government to set up its vision for the future, amid the COVID-19 pandemic. And Ontario Regional Chief RoseAnne Archibald was listening closely.

It’s her job to work with the provincial and federal governments on issues relevant to local First Nations, and she says more concrete action is needed to ensure governments meet their reconciliation commitments.

“I heard a couple of things that I thought were hopeful and certainly could apply to First Nations. And those were the announcements around women in the economy and further investments in youth employment. So those things I thought were very positive,” Archibald said.

But she said she was greatly disappointed by the lack of attention to boil water advisories.

“In Ontario, we have 66 communities under boil water advisories and we have four that have do-not-consume orders. And that’s half of our communities. We have 133 First Nations in Ontario. And so that, to me, is not acceptable,” she said.

While the throne speech in 2019 set a clear target date of March 2021 to eliminate the long-term advisories, this year’s speech from the throne made no reference to that deadline. The federal government is apparently less comfortable with that goal, due to the pandemic, CBC learned from a senior government source. 

Indigenous Services Canada published this update on the progress of its commitment to end long-term drinking water advisories in First Nations communities on Feb. 15, 2020. (Indigenous Services Canada)

“The fact that the date of March 2021 was dropped from their original target date also speaks to the ability that they’re not going to meet their target date. We are still waiting for clean drinking water, a basic human right for First Nations,” said Archibald. 

The pandemic has also made it more difficult to get construction workers into communities.

There have been enough delays, says Archibald. “What we really need now, moving forward, is accelerated funding and accelerated action.”

“If these were 66 non-native communities, 66 municipalities, it would not be acceptable. There would be billions and billions of dollars and really swift action taken. And to me, that speaks to the systemic racism within government and within the whole system. And that has to change. We have to move beyond that. We have to come out of this pandemic in a better, better space than when we went in.”

Ontario First Nations facing big deficits

Archibald says if government wants an example of what swift, decisive action looks like, it should look to how Indigenous leaders have handled the pandemic in their communities. 

“Many of them lock down their communities. They took a harder line than, say, surrounding municipalities, on how to protect citizens, because they know that the health system within their community in many cases is non-existent or if it does exist there, it’s inadequate,” she said.

Community leaders were forced to make these hard choices because of a lack of government-provided infrastructure, said Archibald. For that, she says chiefs and councils across Ontario really deserve recognition for their “strong leadership.”

“They know that they don’t have clean drinking water, many of them. So how can they wash their hands with soap and water? They know that they are in a great disadvantage going into the pandemic and therefore had to take harder action,” she said.

“So if anybody’s really made a difference on the pandemic, it’s been First Nations and they’ve done so because of the chronic under funding by governments for their communities.”

Archibald acknowledges that, like all levels of government, First Nations are going to come out of the pandemic with serious deficits.

“Every government is going into debt right now in order to respond to the pandemic and First Nations are no different. The difference is the ability to recover,” said Archibald. 

Windsor Morning7:13Throne speech response

Hear from Ontario Regional Chief RoseAnne Archibald about last week’s throne speech — and what the federal government needs to do going forward, to continue the work of reconciliation. 7:13

The difference, she said, is First Nations’ communities don’t have the same tools other levels of government have to stimulate recovery when the dust settles. 

“The government of Canada, or even the government of Ontario, they have the ability to borrow [and] repay because they can rebuild their economies. And what are their economies based on? The land that everybody lives on, and that is treaty land.”

Everyone in Canada is a treaty holder, Archibald said.

“And when we think about rebuilding the wealth of Canada and rebuilding the wealth of Ontario — that is coming from First Nations, and we need to be a part of that.”

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Hiring marginalized workers could aid Canada’s economy after coronavirus: report – Global News



The federal Green party accidentally kept donations that were meant to support the leadership campaign of Glen Murray, it said in a statement Tuesday afternoon.

Contributions meant for the former Winnipeg mayor and Ontario Liberal cabinet minister were incorrectly treated as general donations and kept in party coffers rather than being passed on.

Read more:
Greens reinstate leadership candidate expelled over tweet critical of provincial party

Donations to the Green leadership candidates have been routed through the party, which processed them and passed 75 per cent of each contribution on to the campaign that raised the money.

Murray said in an interview that his campaign discovered proof of the problem last week, after spotting that donations his team received and passed on to the party office never came back for the campaign to use.

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“We know it’s a very significant proportion of the funding we raised,” he said, likely tens of thousands of dollars.

Elizabeth May says throne speech needs to include climate action or Greens won’t vote confidence

Elizabeth May says throne speech needs to include climate action or Greens won’t vote confidence

Officially, the Murray campaign’s last fundraising report said it had brought in $59,650.20, making a discrepancy on that scale very significant.

Besides making his fundraising look weaker than it was, the mistake meant Murray couldn’t afford to do all the campaigning he would have liked.

“It really gummed up our planning,” he said.

The Greens’ interim leader Jo-Ann Roberts said that the party is still determining just how much money was improperly withheld. But it would make the top fundraisers’ tallies “much closer.”

Read more:
Green party nearly doubles membership list ahead of leadership race

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The party also said restitution to the Murray campaign will be made “as quickly as possible.”

Voting for the party leadership has been underway since Saturday, with the winner to be announced Oct. 3.

This week, Murray said, his volunteers are torn between trying to track down misdirected contributions and doing what a campaign normally does in the final phase of a race: contacting supporters to make sure they’ve voted.

Murray said he doesn’t know whether the situation can be put right this late in the game.

“Heartbreakingly, I don’t know what they can do now,” he said.

© 2020 The Canadian Press

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