Connect with us

Business

World Bank sees ‘significant’ inflation risk from high energy prices

Published

 on

 Energy Prices are expected to inch up in 2022 after surging more than 80% in 2021, fueling significant near-term risks to global inflation in many developing countries, the World Bank said in its latest Commodity Markets Outlook on Thursday.

The multilateral development bank said energy prices should start to decline in the second half of 2022 as supply constraints ease, with non-energy prices such as agriculture and metals also expected to ease after strong gains in 2021.

“The surge in energy prices poses significant near-term risks to global inflation and, if sustained, could also weigh on growth in energy-importing countries,” said Ayhan Kose, chief economist and director of the World Bank’s Prospects Group, which produces the Outlook report.

“The sharp rebound in commodity prices is turning out to be more pronounced than previously projected. Recent volatility in prices may complicate policy choices as countries recover from last year’s global recession.”

The International Monetary Fund, in a separate blog https://blogs.imf.org/2021/10/21/surging-energy-prices-may-not-ease-until-next-year, said it expected energy prices to revert to “more normal levels” early next year when heating demand ebbs and supplies adjust. But it warned that uncertainty remained high and small demand shocks could trigger fresh price spikes.

The World Bank noted that some commodity prices rose to or exceeded levels in 2021 not seen since a spike a decade earlier.

Natural gas and coal prices, for instance, reached record highs amid supply constraints and rebounding demand for electricity, although they are expected to decline in 2022 as demand eases and supply improves, the bank said.

It warned that further price spikes could occur in the near-term given current low inventories and persistent supply bottlenecks. Other risk factors included extreme weather events, the uneven COVID-19 recovery and the threat of more outbreaks, along with supply-chain disruptions and environmental policies.

Higher food prices were also driving up food-price inflation and raising questions about food security in several developing countries, it said.

The bank projected crude oil prices would reach $74/bbl in 2022, buoyed by strengthening demand from a projected $70/bbl in 2021, before easing to $65/bbl in 2023.

The use of crude oil as a substitute for natural gas presented a major upside risk to the demand outlook, although higher energy prices may start to weigh on global growth.

The bank forecast a 5% drop in metals prices in 2022 after a 48% increase in 2021. It said agricultural prices were expected to decline modestly next year after jumping 22% this year.

It warned that changing weather patterns due to climate change also posed a growing risk to energy markets, potentially affecting both demand and supply.

It said countries could benefit by accelerating installation of renewable energy sources and by cutting their dependency on fossil fuels.

(Reporting by Andrea Shalal; editing by Diane Craft)

Business

Bank of Canada keeps key interest rate on hold – CTV News

Published

 on


OTTAWA –

Canada’s central bank has sent a warning that increases in the cost of living would continue into next year, but signalled it wasn’t yet prepared to pull its key lever to rein in inflation.

The annual pace of inflation in October rose to 4.7 per cent, a pandemic-era high and the fastest year-over-year gain in the consumer price index in 18 years.

The Bank of Canada said high inflation rates will continue through the first half of next year, but should by the second half of 2022 fall back to its comfort zone of between one and three per cent.

By the end of next year, the bank is forecasting the annual inflation rate to fall to 2.1 per cent.

While the path for inflation and the economy are largely following the central bank’s expectations, the statement released Wednesday said the bank “is closely watching inflation expectations and labour costs” to make sure they don’t take off and cause a spiral of price growth.

The comments in the last scheduled rate announcement of the year left the key rate at its rock-bottom level of 0.25 per cent, unchanged from where it was in January at the onset of the COVID-19 pandemic.

The announcement also said that the bank doesn’t expect to raise the trendsetting rate until some time between April and September next year, which is unchanged from its previous guidance.

“Overall, the (Bank of Canada) did indeed resist spitting in anyone’s holiday ‘nog,” Derek Holt, head of capital markets economics at Scotiabank, wrote in a note. “They stayed on track with guidance to begin entertaining rate hikes as soon as next April.”

When the bank moves, it is likely to move fast and furious, said BMO chief economist Douglas Porter. The bank has a history of quickly raising rates from emergency levels, he said, suggesting four rate hikes by the end of 2022.

“When the Bank of Canada believes that interest rates need to go up, they don’t tend to wait around, they tend to move relatively quickly,” Porter said.

The bank said the economy appears to have “considerable momentum” heading to the end of the year after growing at an annualized rate of 5.4 per cent in the third quarter of the year, a hair below what the Bank of Canada forecasted in October.

The Bank of Canada’s statement noted that the quarterly growth brought total economic activity to within about 1.5 per cent of where it was in the last quarter of 2019, before COVID-19 washed upon Canada’s shores.

Similarly, the labour market had a stronger-than-expected showing in November, pushing the share of core-age workers with a job to an all-time high and leaving the unemployment rate 0.3 percentage points above its pre-pandemic level in February 2020.

Still, the bank notes headwinds from devastating floods in British Columbia and uncertainties from the Omicron variant that could throw another wrench into snarled supply chains, and scare off consumers from spending on services.

TD senior economist Sri Thanabalasingam said the bank may move sooner on rates if Omicron proves to be less of a health concern than initially feared, noting the economy can handle it “with inflation running hot, and the labour market on solid footing.”

A rise in rates would impact interest charged for variable rate mortgages, which could tighten the finances of households that over the course of 2021 have added $121.5 billion in mortgage debt, including $38 billion between July and September.

“It’s going to be, I think, particularly problematic for Canadians who have gone into fairly substantial mortgages, particularly when interest rates have been low for such a long period of time,” said Tashia Batstone, president of FP Canada, a financial-planning association.

“What that means is you have to work harder to stick to your budget, you have to be watching the debt that you’re taking on, and in particular watch that you may not be able to have the flexibility around mortgage loans.”

This report by The Canadian Press was first published Dec. 8, 2021.

Adblock test (Why?)



Source link

Continue Reading

Business

Pfizer says COVID-19 booster offers protection against Omicron – CTV News

Published

 on


Pfizer said Wednesday that a booster dose of its COVID-19 vaccine may protect against the new Omicron variant even though the initial two doses appear significantly less effective.

Pfizer and its partner BioNTech said lab tests showed a booster dose increased by 25-fold the level of so-called neutralizing antibodies against omicron.

Pfizer announced the preliminary laboratory data in a press release and it hasn’t yet undergone scientific review. The companies already are working to create an omicron-specific vaccine in case it’s needed.

Scientists have speculated that the high jump in antibodies that comes with a third dose of COVID-19 vaccines might be enough to counter any decrease in effectiveness.

Antibody levels predict how well a vaccine may prevent infection with the coronavirus but they are just one layer of the immune system’s defences. Pfizer said two doses of the vaccine may still induce protection against severe disease.

“Although two doses of the vaccine may still offer protection against severe disease caused by the Omicron strain, it’s clear from these preliminary data that protection is maximized with a third dose of our vaccine,” Pfizer CEO Albert Bourla said in a statement.

——

The Associated Press Health and Science Department receives support from the Howard Hughes Medical Institute’s Department of Science Education. The AP is solely responsible for all content

Adblock test (Why?)



Source link

Continue Reading

Business

Ontario COVID-19 science advisor recommends tighter restrictions in Thunder Bay – Tbnewswatch.com

Published

 on


THUNDER BAY — A leading Ontario epidemiologist believes the Thunder Bay District Health Unit should take measures immediately to mitigate the further spread of COVID-19.

“The trajectory is in the wrong direction. At this rate, they will start to be challenged” with managing the situation, says Dr. Peter Juni.

Juni is the scientific director of the province’s COVID-19 science advisory table.

The COVID-19 caseload has been rising steadily in the Thunder Bay area since mid-November, including cases at numerous schools.

The 54 new cases reported on Monday was the largest number of new cases reported since March 17, 2021.

It brought the active case count to 137, including some cases of the new Omicron variant.

The risk for TBDHU, Juni said, is that “You can’t just get contact tracing, testing and management done as efficiently as before….Omicron pops up now, and you potentially have a problem.”

He said although the challenges presented by the new variant aren’t fully known yet, it needs to be taken very seriously.

It’s why, Juni said, he recommends swift action to slow the spread of the Delta variant while simultaneously preventing Omicron from becoming dominant.

“If I were in the shoes of the local public health unit, and the medical officer of health, I would really follow the same sort of decision-making that Windsor-Essex has just had,” he told TBNewswatch on Monday.

The Windsor-Essex County Health Unit announced Sunday that it is introducing new measures that go beyond current provincial regulations.

In its service area, where the rate of COVID-19 infections is starting to put a strain on local hospitals, the following restrictions will take effect on Dec. 10:

  • social gatherings limited to 10 people indoors and 25 outdoors
  • added measures for wedding receptions and for social events tied to funerals and religious services
  • limiting indoor capacity for bars and restaurants to 50 % of their usual occupancy limit
  • strict adherence to face-covering requirements in all public settings

“The virus loves indoor spaces. It hasn’t changed for Delta and it won’t change for Omicron either,” Dr. Juni said.

He said it’s also essential that people “don’t cut corners with masking.”

At sports venues specifically, he said, he would seriously consider disallowing the consumption of food and drink in order to keep masks in place.

Adblock test (Why?)



Source link

Continue Reading

Trending