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What the Bank of Canada’s renewed mandate means for inflation, housing – Global News



The wording of the Bank of Canada’s new mandate has changed but the substance of it remains essentially the same, several economists say.

Canadians can expect the country’s central bank to continue to aim for low, stable and predictable inflation. And when it comes to the impact of low interest rates on the housing market, it will be up to the government — not monetary policy — to get a handle on runaway home prices.

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Bank of Canada to maintain current inflation mandate

In a joint press conference on Monday, Finance Minister Chrystia Freeland and Bank of Canada governor Tiff Macklem announced the details of the new five-year mandate, the compass that will guide the central bank’s monetary policy decisions until the end of 2026. While the Bank of Canada makes monetary policy decisions independently, every five years the federal government gets a say in the overall framework under which the bank operates.

According to the new mandate, the “primary objective” of the Bank of Canada will continue to be to pursue an inflation target of two per cent, as it has done since 1991.

The new framework also instructs the central bank to put new emphasis on the labour market when weighing how its policy options. But the new twist won’t change much in practice, according to economists interviewed by Global News.

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Canadians are about to face more sticker shock at the grocery store

That’s because the new mandate stops short of making full employment a second target for the Bank of Canada as it is for U.S. Federal Reserve. Economists define full employment as an ideal labour market in which everyone who wants to work can find a job.

“This is really a repackaging of the existing mandate for the Bank of Canada in a new candy wrapper,” says Avery Shenfeld, chief economist at CIBC.

The Bank of Canada’s approach to the housing market, where prices are affected by the cost of borrowing, will also remain the same, according to the documents backing the decision.

Click to play video: 'No short-term solutions to rising cost of living: former Bank of Canada governor'

No short-term solutions to rising cost of living: former Bank of Canada governor

No short-term solutions to rising cost of living: former Bank of Canada governor

Canada already aiming for full employment, economist says

Aiming for full employment was already “inherent” to the central bank’s approach to policymaking, Shenfeld adds.

And the new mandate stops short of defining what full employment is, says Chris Ragan, director of the Max Bell School of Public Policy at McGill’s University.

Ragan, along with other economists commenting on the new mandate on Twitter, expressed relief over the decision not to formally add full employment as a second target for the central bank.

“People like me who think the central bank shouldn’t have a dual mandate argue that the central bank already cares about things like employment and unemployment and the output gap and real GDP growth,” he says.

“But the only thing (the Bank of Canada) can really influence in a sustained way is inflation,” he adds. “So set the target up as inflation.”

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Politics not to blame for inflation, former Bank of Canada governor says

To manage inflation, the Bank of Canada adjusts its trend-setting interest rate, which affects the general level of interest rates in the economy. When interest rates go up, it becomes more expensive for individuals and businesses to borrow, which usually cools off economic activity and slows down inflation. Lowering interest rates, on the other hand, tends to stimulate economic activity and put upward pressure on inflation.

The central bank may, in certain instances, have to hold its key interest rate “at a low level for longer than usual,” according to the documents.

But the way the Bank of Canada was targeting inflation — at two per cent within a range of one and three per cent — was already explicitly flexible, Shenfeld notes.

“They weren’t trying to steer inflation every minute of the day to two per cent, but rather get the economy to a fully employed position where we could have, on average, two per cent inflation,” he adds.

The mandate renewal documents also mention the Bank of Canada “systematically” reporting to Canadians about how labour market impacts factor into its monetary policy decisions.

That likely means the Bank of Canada governor will have to spend more time talking about how variables like employment, unemployment and vacancy rates influenced its thinking when making their appearance on Parliament Hill, Ragan says.

“I think that’s actually a good thing,” he says. “The more the bank can communicate … the underlying logic of its policy actions to the Canadian people (the better).”  

Click to play video: 'Canada’s inflation rate soars to 4.7% in October'

Canada’s inflation rate soars to 4.7% in October

Canada’s inflation rate soars to 4.7% in October – Nov 20, 2021

What about the housing market?

If the brainstorming behind the new mandate led to a new emphasis on the job market, it did not include new thinking on the housing market.

Canada has seen a record spike in home price appreciation during the pandemic, with the national average home prices up 18 per cent in October compared with the same month in 2020, according to data from the Canada Real Estate Association (CREA).

Persistently low interest rates contribute to a hot housing market by making it cheap to carry a mortgage, which also drives up household debt levels.

“A prolonged period of low interest rates could contribute to a buildup of financial vulnerabilities,” reads the 74-page report that backs the Bank of Canada’s new mandate.

Read more:

Canada’s housing market hotter than ever — and investors are playing a big role

The value of Canada’s household debt now exceeds that of the country’s GDP, and its relative size has doubled since 1990, according to the document.

Still, government policies are “better suited” than monetary policy to addressing those vulnerabilities, the document reads.

“There are some problems created by (having) very low interest rates for long and rising house prices is one of them,” Ragan says. “But there are also benefits created from those low interest rates, which is to support that demand.”

“We haven’t figured out how to solve rising house prices,” he adds, “but I would be the first to argue that it’s not really monetary policy problem to do that.”

© 2021 Global News, a division of Corus Entertainment Inc.

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Gloomy Netflix forecast erases much of stock’s pandemic gains



Netflix Inc dashed hopes for a quick rebound after forecasting weak first-quarter subscriber growth on Thursday, sending shares sinking nearly 20% and wiping away most of its remaining pandemic-fueled gains from 2020.

The world’s largest streaming service projected it would add 2.5 million customers from January through March, less than half of the 5.9 million analysts had forecast, according to Refinitiv IBES data.

Netflix tempered its growth expectations, citing the late arrival of anticipated content, such as the second season of “Bridgerton” and the Ryan Reynolds time-travel movie “The Adam Project.”

Shares of Netflix plummeted nearly 20% to $408.13 in after-hours trading. Competitor Walt Disney Co, which has staked its future on building a strong streaming business, saw its shares sink 4%. Streaming device Roku Inc fell 5%.

Nasdaq futures dropped almost 1%, showing trad

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Pfizer's newly approved COVID-19 antiviral pills arrive at Queensway Carleton Hospital – Ottawa Citizen



Pfizer’s Paxlovid treatment has been approved to treat mild to moderate COVID in adult cases where the patient has tested positive and is at high risk of getting severe COVID-19, including hospitalization or death.

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The Queensway Carleton Hospital has received 700 courses of Pfizer’s Paxlovid pill, the first take-home medication for treating COVID-19.


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Health Canada announced the prescription antiviral treatment was approved on Monday. Each course of treatment involves two antiviral drugs, nirmatrelvir and ritonavir. The treatment consists of two oral tablets of nirmatrelvir and one of ritonavir, taken together twice a day for five days.

The province says 15 hospitals will be receiving Paxlovid. For now, it’s unclear how it will be distributed, although the Public Health Agency of Canada has released preliminary guidelines for categories of patients to be prioritized.

Until now, COVID-19 medications were given intravenously or by injection in a hospital or health-care settings. Paxlovid is expected to be in high demand, but the global supply is limited.


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The Queensway Carleton Hospital is actively working on creating a regional process with other hospitals, led by director of pharmacy Joe Dagenais, to identify which patients are eligible and the criteria they need to meet to receive this treatment, hospital spokesperson Kelly Spence said. Dagenais is also head of the regional pharmacy committee and is spearheading regional plans.

  1. Pfizer’s antiviral treatment for COVID-19 is approved for adult patients with mild or moderate symptoms at high risk of becoming more seriously ill.

    Health Canada approves Pfizer anti-viral pill for treatment of COVID-19

  2. (FILES) This file handout photo courtesy of Pfizer shows the making of its Covid-19 antiviral pills inside a laboratory in Freiburg, Germany.

    Experts stress Pfizer’s antiviral COVID-19 treatment not a replacement for vaccines

“We are waiting to receive patient eligibility guidance from the Ontario COVID-19 Science Table, hopefully coming this week,” Spence said.

Ontario expects to receive about 10,000 courses of treatment from the federal government in January, Ministry of Health spokesperson W.D. Lighthall said in a statement.


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“Based on the limited supply we expect to receive from the federal government, we have worked with our hospital partners and are prepared for distribution of antivirals at 15 sites across the province as soon we receive them.”

Initially, the medication will be prioritized for adults with the highest risk of severe outcomes, including immunocompromised patients, Lighthall said.

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The Ontario Medical Association is seeking more details but understands clinical assessment centres may have key roles in prioritizing testing and eligibility and ensuring timely delivery, spokesperson Leslie Shepherd said.

Manotick physician Dr. Alykhan Abdulla, past chair of the association’s section on general and family practice, said family physicians are still learning more about these medications and support the province’s plan at this time.


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“We want to have access to prescribing these medications in a month or so.”

Health Canada received the Paxlovid submission from Pfizer on Dec. 1 and conducted an expedited review, including information confirming its effectiveness against the Omicron variant.

Paxlovid has been approved to treat mild to moderate COVID in adult cases where the patient has tested positive and is at high risk of getting severe COVID-19, including hospitalization or death.

It’s not approved for patients who are already hospitalized or to prevent COVID. Paxlovid can’t be used more than five days in a row and has not been approved for those under 18 years old.

The Public Health Agency of Canada’s interim set of guidelines for prioritizing patients includes those who have the highest likelihood of severe illness, including patients who are immunocompromised, regardless of their vaccination status, as well as those over the age of 80 whose vaccinations are not up to date.


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Patients over 60 who live in underserved rural or remote communities, long-term care homes, First Nations, Inuit, and Metis communities are also prioritized under the interim guidelines.

Pfizer reported in November that Paxlovid reduced the risk of hospitalization or death by 89 per cent compared with a placebo in high-risk adults who were not hospitalized.

Health Canada’s review found the benefits outweigh potential risks, but also cautioned that Paxlovid has the potential to interact with other prescription drugs.

Health officials also said public health measures and vaccinations remain key ways to prevent infection, and no drug is a substitute for vaccination.

Paxlovid could help keep thousands of people out of hospitals, Lighthall said.

“The arrival of these pills gives us increased confidence as we continue to review key indicators and data to determine when we can begin safely and gradually lifting public health measures, and we look forward to providing additional details in the near future.”



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Amazon to open fashion store where algorithms suggest what to try on


 on Inc’s recipe for the department store of the future includes algorithmic recommendations and what one corporate director called “a magic closet” in the fitting room.

The online retailer is making another push to grow its fashion business, announcing on Thursday it will open its first-ever apparel store this year, with a tech twist. “We wouldn’t do anything in physical retail unless we felt we could significantly improve the customer experience,” said Simoina Vasen, a managing director.

At 30,000 square feet (2,787 sq meters), the planned “Amazon Style” shop near Los Angeles is smaller than the typical department store. Model items are on the racks, and customers scan a code using Amazon’s mobile app to select the color and size they would like. To try on the clothes, which are stored in the back, shoppers enter a virtual queue for a fitting room that they unlock with their smartphone when it is ready.

Inside, the dressing room is “a personal space for you to continue shopping without ever having to leave,” Vasen said. Each has a touchscreen letting shoppers request more items that staff deliver to a secure, two-sided closet “within minutes,” she said.

“It’s like a magic closet with seemingly endless selection,” Vasen said.

The touchscreens suggest items to shoppers too. Amazon keeps a record of every good a customer scans so its algorithms personalize clothing recommendations. Shoppers can fill out a style survey as well. By the time they arrive in a fitting room, employees have already deposited customers’ requested items and others that Amazon has picked.

Shoppers can opt out with a concierge’s help, Amazon said.

Amazon has unveiled tech to help customers choose outfits before. The company has surpassed Walmart Inc as the most-shopped clothing retailer in the United States, according to analyst research.

But it still has room to expand and compete with the likes of Macy’s Inc and Nordstrom Inc, which have opened smaller-format stores. Amazon’s lineup of physical grocery and convenience shops have yet to upend brick-and-mortar retail.

The company’s new store aims to attract a broad range of shoppers with hundreds of brands, Vasen said, declining to name examples.

It has hundreds of associates, and no cashier-less checkout like some Amazon stores, Vasen said. Still, using a biometric system known as Amazon One, customers can pay with a swipe of their palm.


(Reporting By Jeffrey Dastin in Palo Alto, California; Editing by Christian Schmollinger)

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