Danielle Smith, Alberta\'s Premier, joins BNN Bloomberg to discuss the Supreme Court\'s ruling against Ottawa\'s environmental impact law, and the possibility of Alberta abandoning the Canada Pension Plan to run its own stand-alone fund.
Since 2008 Canada has been pushing home prices higher. Canadian homes are considered by many to be the least affordable of all G20 nations. What gives?
The latest Canadian real estate and government news. Risk of collapse, end of QE and rate rise are some of the issues discussed. Also the governments poor foreign policies on Ukraine are covered.
The Bank of Canada and other central banks, in conjunction with indigenous leaders want reconciliation and better economic outcomes for individuals. This video explores what is happening, gives the back story and sets the stage for a more in-depth analysis.
Inflation and tariffs hit Trudeau in the face. Oil route as new strain goes viral. BNPL benefits questioned and investors open their wallets to receive dividends.
The latest financial news from the financial services industry monitor. Insurance companies should know that in 1990 BC flooding devastated the same flood plains as today. This report features coverage of insane inflation, interest rates hikes and the ongoing real estate melt-up.
Poloz is wrong about inflation, university pension funds are out of their league, Home Capital run away, real estate wars and more from the financial services industry monitor.
We a living a ponzi real estate market and the economy is at risk. Yet Doug Porter, economist BMO, is on record as saying Candian\'s want to pay more for houses. Yes, you can\'t make this stuff up. This video discusses the issues related to Porter\'s statement and explains why he is wrong.
2020 was a record year, except for condos. Montreal REM sites the exception to this rule. This video shares insights regarding the Canadian real estate segment.
This video is intended to give viewers an understanding of the economic ideas behind Canada's potential housing bubble. This video also explains why Siddal, President and CEO of the CMHC, was likely pushed from his post.
Overview of Canadian banking industry. This multi-part series looks at issues facing Canadian banks from a variety of angles. Part 1 examines the types of banks and scale using ROE and EBITDA as measures.
Using financial data, Mark Sibthorpe compares the performance of TD bank to its rivals. TD grew faster in 2017 than its rivals, but was cited for aggressive sales practices.
This video covers XE.com's presentation at the AI, Big Data and Analytics event which took place in Toronto February 7/8, 2018. Cecelia Tamez and Jean Louis provide insights into their evolution and winning strategy.
Greenpeace's campaign to stop TD financing the oil sands is delusional. Trillions of dollars are at stake for the banks and the Canadian economy. This video explores the related financial issues.
Canadian banks have increased their deposits by $127 billion since the start of the pandemic. This video uses charts to show which banks gained the most and how.
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Since November 2, 2021, Loyalty Ventures Inc.'s (Airmiles) market cap has decreased from $861.42M to $2.11M, a decrease of -99.75%. This compares closely to 2018, when Aimia sold Aeroplan back to Air Canada and partners TD and CIBC for $238 million. For reference, in 2005 Aeroplan launched an IPO valuing it at $2 billion. Related to Aimia’s downfall, it had also previously sold the UK Nectar program to Sainsburys for $120 million, $580 million lower than it paid for Nectar in 2007.
This report digs under the surface and uncovers why loyalty is going the way of the dodo.
Merchants should not waste time fighting card networks
This is part one of a two part assessment of merchant frustration due to high credit card fees. The second part of this report will outline an alternative approach that merchants can consider. An approach that is a win for them and also for the card networks.
Aggregated news and research related to SVB. Apart from SVB, included in this report is related news with respect to other banks and non-traditional companies looking to add financial services that also appear risky.
The big buzz in real estate recently is Mark Carney being scooped up by Brookfield. This means more juice for riskier borrowers. Brookfield, a huge player in real estate, both residential and commercial, recently bought its remaining shares from Sagen (Genworth MI Canada), which values the company at $3.8 bn.
VersaBank’s New High-Security VPN Proving Especially Valuable During COVID-19 Pandemic
VersaBank (TSX:VB) (“VB” or the “Bank”) today announced the implementation of its new high security Virtual Private Network (VPN) remote access software solution, developed in partnership with Tailscale, a leading provider of secure network connectivity solutions. The software enables VersaBank employees to securely and directly connect to all the Bank’s servers across multiple offices and cloud providers, using two factor authentication and with every connection encrypted. The Tailscale-based solution uses the Office 365 setup and Windows client/server applications that the Bank already had in place.
Considering Bernanke is hated by the Republicans and hated even more by the Democrats, and is currently under scrutiny for saving AIG but not Lehman, (in hindsight) with respect to issues over solvency vs liquidity, the Montreal lovefest attended by 1,100 people yesterday must have been a welcome respite. Click the link to read the entire 2014 report.
I have been reporting on Steve Eisman's short position for quite some time. As the analyst reaction to Eisman shows (link below), Eisman has taken a lot of heat for shorting Canadian banks. Instead of capitulating, in September 2019 he publicly disclosed the fact that he added Canadian Tire to his position, He explains the rationale for this in a BNN interview late 2019. Essentially, his big concern with respect to banks was non-performing loans in Alberta. He feels Canadian bank CEOs are not prepared for a credit cycle. He specifically referenced ATB (a private bank) in discussing his concerns. Looking at the numbers today, my guess is that he has made off like a bandit.
VersaBank Beta-Testing Its New, High Volume Mortgage Finance App
VersaBank announces it is initiating beta-testing on its newly developed high-volume mortgage software app with the Cortel Group, one of Canada’s largest home and condominium builders. The app, named “Direct Connect”, was designed to facilitate and significantly reduce the lengthy finance approval process typically experienced by home buyers when visiting home and condo pre-construction sales offices.
How and why you need to defend your brand against disruptors
Mark Sibthorpe
Technology, and being open to opportunities, has preempted transformation in banking. At the top of change are Mint, PayPal and ApplePay; three examples of transformative solutions that are now ubiquitous. On the horizon: Uber and Google, both having recently announced partner based banking services. Further down in the plumbing is Duca Impact Labs, Versabank, and Revolut. This report shows how cost conscious FIs can, not only stay relevant in the face of adversity, but punch well above their weight. All thanks to creative thinking and the ongoing commoditization of technology.
Canada has used consumer debt to provide life support to the economy. This strategy which basically pushed the day of reckoning to the next government was old back in 2014, and now is well past its sell-by-date. Recognizing this, and desperate to keep the economy out of a recession, Trudeau is spending more money now than any government in Canadian history. This report disusses a possible alternative.
ScoreCard Bill Morneau, Canada's Minister of Finance
This report is a scorecard I designed in order to rank the performance of the current Minister of Finance, Bill Morneau. I do regular rankings because, otherwise, I cannot measure the performance in a meaningful way. The scoring is based on a variety of metrics as detailed on the ‘score-table’ on page 3. Examples of the criteria and weighting include:
Observations and overview of 2018 NB flood support from government and insurance companies.
Flood aftermath is linked to post traumatic stress. Here are some findings from a study conducted by Queensland University following a flood:
"The findings showed that aftermath stress contributed to poor mental health outcomes over and above the flood itself, prior mental health issues and demographic factors," Ms Dixon said.
"Aftermath stress was the strongest predictor of post-traumatic stress symptoms with 75 per cent of people saying the most difficult aspect was the aftermath and dealing with insurance companies," she said.
With this in mind, I felt it was important to understand how New Brunswick flood victims were treated.
Argentina is in the news daily because the situation is dire, and may be an indication of further contagion. The most dramatic story that speaks of the a leading cause of its troubles was the recent arrest of the public works secretary, Jose Lopez. June 15th he was caught hiding millions in cash in a monastery. No this is not a plot for a comedy.
As states across the US legalize marijuana for both medicinal and recreational purposes, it has fueled a growing industry of marijuana related businesses (MRBs).
With Walmart Pay about to userp Apple Pay, I thought I would share my 2014 book on mobile payments and loyalty. The guilde was written for Merchants that want to understand loyalty, credit, mobile payments and Apple Pay, but anyone involved with credit and loyalty might find it useful.
The book is a prelude to Walmart leaving MCX, and chronicles the evolution that led to Walmart Pay. There is an extensive case study of Walmart that looks into its efforts to become an ILC and to avoid paying credit card transaction fees ('merchant discount').
It offers readers a step-by-step methodology for evaluating and transforming credit and loyalty programs. The strategies are based on proven examples and industry facts. The Nectar, Target, Canadian Tire and Walmart case studies are examples of the practical approach I have taken, written with the intent that merchants can use them as blueprints for their own initiatives.
TD’s share price recently collapsed by $7 bn in one day due to CBC’s allegations of aggressive selling tactics. A huge fall from a bank that was trading at a premium as recently as January. This was even before the most recent allegation of TD attempting to avoid paying taxes on advertising.
This report chronicles the events leading up to the collapse, shows TD's performance, analyses other related issues.
Footnote 151 implies an important regulatory change related to derivative contracts. It means that US Banks will not be required to hold as much capital against commodities. If you want to understand the implications of this regulatory change in more detail, see the enclosed related article detailing the changes. For contextual purposes, I have also included two Rolling Stones Magazines reports from 2010 and 2014 that chronicle the role large US banks have played in manipulating commodities. You might question the credibility of these sources, but rest assured, these reports are based on United States Senate hearings which outline the issues in a 396 page report related to the implied risks.
Consumer debt spending appears to have insulated Canada from the worst of the credit crisis, but now the alarming magnitude of consumer debt ($1.92-trillion) could exacerbate a day of reckoning.
This report assesses the issues at hand and recommends the solution to get Canada's economy on track.
Reasons financial service companies should consider gamification
According to Bloomberg, National Bank of Canada will take a C$64 million ($48 million) restructuring charge in the fourth quarter and said its investment in Maple Financial Group Inc., which is being probed by German regulators, may be at risk of a “substantial loss.”
Will Canadian banks charge companies for deposits?
In light of today’s possible rate cut, this report discusses how a bank rate cut and capital ratio pressure could precipitate negative corporate deposit interest rates in Canada.
Canadian Tire's (CTC) - Canadian Tire Financial Services (CTFS) Scotia deal overview and risk assess
Whether he knew it or not, Tom Reid, a senior vice-president at Sun Life, made a case for the behavior modification concept ‘Nudging’ when he recently proposed auto-enrolling Canadians in his company’s pension plans. Sun life cover 1.2 million Canadians, about 60% of the eligible employees.
This report looks at Canadian challenger banks (apart from merchant led banks) and explains why they have not threatened larger institutions. It also looks at ways in which these upstarts have achieved success.
Canadian banks have made money throughout the credit crisis, but this trend may be about to reverse. The rational supporting this prediction is that revenue has grown despite a declining net interest margin (NIM). It has grown in spite of this fact because Canadian debt (loan lease volume) has risen significantly, as shown in chart 2.
This report looks at the issues facing Canadian banks in the event of a Bank Rate rise.
Yesterday, the Attorney General of Switzerland (OAG) opened criminal proceedings related to the FIFA scandal. This report outlines some of the events related to the criminal investigation, with a particular focus on banking.
March 18, Finance Minister Jim Flaherty resigned from cabinet after having endured a difficult year due to health issues. This report looks at his legacy and attempts to grade his government’s performance to date.
Merchant led financial services are growing in importance once again. This is exemplified in the ongoing UK rivalry between ASDA, Sainsbury and Tesco. Together these merchant/financial service companies provide the backstop for three different approaches for merchants looking to extend their financial services.
Canadian and London real estate, like Macau, may also be a convenient means for China’s elite to move money offshore; with the deleterious effect of driving up home values. Louise Shelley`s research concurs. In a published paper written for the National Defense University, Shelley argues that money laundering in real estate (MLRE) increases prices.
Genworth had its Q4 2014 earnings call. Genworth own about 30% of the mortgage default insurance in Canada. Not surprisingly, the earnings call became focussed on Alberta; and for good reason, with 20% of its outstanding insured mortgage balance in Alberta, sensitivity to the oil shock and how Genworth plan to manage related risks were discussed in detail.
Based on historical financial data (see detailed charts pages 5-8), the oil based recession in Alberta, and comparison against two of its peers, this document outlines my observation with respect to CWB’s future performances.
Recently the CBC and The Globe and Mail both reported on what has been referred to as a consumer “bank fee outcry”. CBC compares banks to cable and phone companies, standing accused of trying to gouge customers with service fees. The backlash appears to have originated in conjunction with the NDP and the Consumers Council of Canada which argues that there is anxiety ‘among consumers about banking fees’.
Cheap oil has pushed the Bank of Canada's governor, Stephen Poloz onto a slippery slope. For some background on this, take October 22nd, when Poloz bid farewell to forward guidance, resulting in yesterday's surprise rate cut. A cut that has enraged TD and other banks, which see this as eroding profits.
This report explores Canada's strategies to compete globally. The report begins with an analyses of the housing market, because housing is the canary in the coal mine; explores what happens in the event of collapse; and analyses the underlying problem causing Canada to be uncompetitive.
Mobile Payments Blueprint: guide to credit and loyalty transformation for merchants
Merchants that want to understand loyalty, credit and mobile payments should read this book. It offers readers a step-by-step methodology for evaluating and transforming credit and loyalty programs. The strategies are based on proven examples and facts. The Nectar, Target, Canadian Tire and Walmart case studies are examples of the practical approach I have taken, written with the intent that merchants can use them as blueprints for their own initiatives.
Operating in a ring-fenced environment and involving a digital currency that is a real claim on the Reserve Bank, 14 pilot projects with a range of industry participants investigated potential CBDC use cases.
There may be lies, damned lies, and statistics as Mark Twain posited. But statistics, as flawed as they may be, are all we have to go by. And the statistics show a Canadian economy that very likely has already slipped into a recession, even as Tiff Macklem doth protest too much.
Consumer debt and credit delinquencies are on the rise as high interest rates, skyrocketing housing costs and inflation take a toll on Canadian borrowers, according to a third-quarter report from credit-rating agency Equifax Canada. Credit counsellors say they expect those effects will worsen in coming months and years.\nRebecca Oakes, vice-president of advanced analytics at the firm, said credit card debt rose significantly and drove increases in overall debt in the third quarter of 2023, a concerning trend that leaves Canadians vulnerable to high interest rates.
Westbank Corp., a prominent Canadian developer known for its ambitious architecture, is facing problems at several projects in Toronto and Seattle with contractors claiming millions of dollars in unpaid bills.
“We expect the Bank of Canada (BoC) to remain on hold with the overnight rate at five per cent. The economy remains weak as shown by the GDP contraction in 3Q (-1.2 per quarter-over-quarter seasonally adjusted annual rate) and the output gap is closing.
Yahoo Finance - Pete Schroeder and Nupur Anand (2023-12-06)
Supervisors are targeting small, mid-size and larger banks, the people said. Reuters could not ascertain exactly how many banks overall were targeted, but eight of the sources said they each had knowledge of multiple cases or banks affected.
The 27-nation bloc’s Artificial Intelligence Act has been hailed as a pioneering rulebook. But with time running out, it's uncertain if the EU's three branches of government can thrash out a deal Wednesday in what officials hope is a final round of talks.
The concern is if higher interest rates further dampen demand the ratio will slip to levels not seen since the deep housing market downturn in the late 1980s to mid-1990s, said TD economist Rishi Sondhi. Sales-to-new-listings ratios measure supply and demand in housing markets and help predict prices. A ratio under 40 per cent means a buyer’s market where new listings exceed sales, between 40 and 60 per cent is a balanced market and over 60 per cent, where demand outstrips supply, is a seller’s market. During the late 1980s and early 1990s, home prices plunged by 32 per cent across Ontario, falling 38 per cent in the Greater Toronto area. The economic backdrop is also better. From March 1990 to May 1992, Canada was in a deep recession, brought on by high interest rates and fiscal belt-tightening, among other forces. Ontario GDP and employment dropped 6 per cent peak to trough.
Greater Toronto real estate prices continue to fall, now wiping out any gains made over the past year. The TRREB benchmark price shed $22.3k to hit $1.08 million in November. The City of Toronto benchmark fell $19k to $1.06 million. Both measures are virtually unchanged from last year, with the brief period of gains made earlier this year now totally wiped out.
According to the AGCM, messages about the move were sent to customers in the archive section of the Intesa Sanpaolo App without any push notifications or pop-ups.
MPs have also urged the Government to alleviate privacy concerns around the misuse of personal data through robust regulation and legislated protections.
In addition to servicing the existing mortgages, Nesto will also be responsible for the Canada Life mortgages at maturity.\nThe partnership follows Canada Life’s 2022 decision to withdraw from the residential mortgage market.
Payment technology company Nuvei Corp. has signed a partnership agreement with Microsoft Corp. Financial terms were not immediately available.\nUnder the deal, Microsoft will start using Nuvei’s payments technology in the Middle East and Africa.
Swiss private bank Banque Pictet has admitted to helping U.S. taxpayers hide more than $5.6 billion from the Internal Revenue Service (IRS) and has entered into a deferred prosecution agreement with the Justice Department, federal prosecutors said on Monday.
And as banks set aside hundreds of millions more in reserves for bad loans, are there risks to Canada’s economy and financial institutions? Ron Butler, mortgage broker at Butler Mortgage and host of the Angry Mortgage Podcast, explains.
"If you were not the one who input your bank card number, secret online banking password and the one-time passcode, then either you somehow disclosed this information, or one of your devices (computer, cellphone) may have been compromised to allow someone to gain access to this information," wrote senior investigator Gary Jasper.
The national cleantech lead at RBCx, Royal Bank’s (RY.TO)(RY) in-house shop for providing banking services and capital to tech companies, joined a panel discussion last week to discuss corporate participation in Canada’s innovation ecosystem.
The extent to which FHLBs finance insurers has not been previously reported. Reuters interviews with more than a dozen industry executives and regulators, a review of regulatory disclosures and data show this borrowing has not been matched by a rise in home loan affordability, with the cost of mortgages soaring to its highest in 23 years.
The credit rating firm said it expects China’s economy to grow at a 4% annual pace in 2024 and 2025, slowing to an average of 3.8% for the rest of the decade.
Words are fighting it out with numbers in financial markets at present. Comments by central bankers underline their desire to keep interest rates high until price growth quiesces. Traders, however, are paying closer attention to falling inflation figures, sending bonds higher in the expectation of lower borrowing costs. Policymakers’ recent mistakes mean they will struggle to convince investors their tough talk is real.
Bloomberg - Sunil Jagtiani and Suvashree Ghosh (2023-12-05)
The stock market had a rough Monday following several weeks of strength. It was a similar story in the bond market. And gold did a U-turn after climbing to a new record above $2,100 an ounce.
The Desjardins report, using data from analytics firm AirDNA, said Canada has more than 235,800 unique active short-term rental listings on Airbnb and Vrbo, the two largest hosting platforms, amounting to about 1.4% of the country’s housing stock.
The Bank of Canada is expected to cap another tumultuous year for monetary policy with a stand-pat decision this week that keeps interest rates steady while offering few hints about what comes next.
If you’ve loaded up on GICs over the past 18 months, I understand. I’ve bought a couple myself. The thought of a 5-per-cent yield is intoxicating after years in which payouts were often half that.
The top bosses of JPMorgan, Bank of America, Citigroup, Wells Fargo and other major banks are expected to warn lawmakers this week that capital hikes and other new regulations will hurt the economy and should be indefinitely shelved.
Swiss bank UBS (UBSG.S) plans to expand its presence in the U.S. market as part of its strategy to hit $150 billion in net new money, or inflow of new funds, per year, an executive told Swiss newspaper NZZ Am Sonntag in an interview published on Sunday.
Apple and Goldman Sachs are on the verge of splitting up, and Chase is the ideal partner to step in. Also: Sonos gets ready to take on Apple and others in headphones and TV set-top boxes; Apple continues eyeing 6G; and new retail stores are coming.
Consulting giants and law firms are looking to artificial intelligence to speed up the time it takes junior staffers to make it to the prestigious partner level as the technology eliminates vast swaths of the repetitive, time-consuming tasks that typically filled up their first few years on the job.
Bloomberg - Takashi Nakamichi and Nao Sano (2023-12-04)
Several Japanese investors sued the brokerage arms of SBI Holdings Inc., Rakuten Group Inc. and Monex Group Inc., adding to the fallout in the world’s third biggest economy over losses on Credit Suisse’s riskiest debt.
Today, the average APR for the benchmark 30-year fixed mortgage fell to 7.52% from 7.57% yesterday. One week ago, the 30-year fixed APR was 7.69%. Meanwhile, the average APR on a 15-year fixed mortgage sits at 6.71%. At this same time last week, the 15-year fixed-rate mortgage APR was at 6.97%. And the average APR on the 30-year fixed-rate jumbo mortgage is 7.57%. Last week, it sat at 7.72%
The Ontario government is moving quickly to get more money into major projects by appointing former Bank of Nova Scotia\nchief executive officer Brian Porter as the inaugural chair of the newly created Ontario Infrastructure Bank.
Canadian banks are slashing jobs to curb mounting expenses and taking higher loan loss provisions as they grapple with the threat of an economic slowdown
Royal Bank of Canada, Toronto-Dominion Bank and Canadian Imperial Bank of Commerce reported on Thursday while Bank of Montreal, National Bank of Canada will release their fourth-quarter results on Friday.
The Canadian economy tumbled over the summer as export shipments waned and consumer spending flattened, signs of a continuing malaise as the country grapples with higher interest rates – and a sharp contrast with robust growth in the United States
"Whatever label you slap on this economy, it's basically not growing, despite the artificial sweetener of rapid population growth," he said. "The big picture is that the Canadian economy is struggling to grow, yet managing to just keep its head above recession waters."
Yahoo Finance - Eliza Ronalds-Hannon and Erin Hudson (2023-12-01)
The so-called ad-hoc group of bondholders, which has said it holds more than $6 billion of the builder’s about $19 billion of offshore notes, has held a key role in Evergrande’s restructuring talks.
On Friday, Caixabank, the country's biggest lender by domestic assets, said the supervisor had set a minimum threshold of 8.58% for its strictest measure of solvency, or Common Equity Tier 1 (CET1), for 2024 compared to 8.44% set a year ago by the ECB.
“Everybody understands that HSBC is leaving, has made a choice to leave, and it would look horrible on Canada if you didn’t allow the free flow of capital.”
In 2020, the company abandoned a planned UK launch as it dealt with operational problems caused by an explosion of day trading in its core US market during the Covid-19 pandemic. A renewed push was signalled in July when it tapped Freetrade executive Jordan Sinclair to lead the business in the UK.
Canadian businesses rejected by banks are increasingly turning to private lenders for financing, as demand for capital outstrips supply in the traditional debt market.
Canadians heading into retirement are in a great position, said no one ever. But even by this usual standard of negativity, a new report on retirement by Deloitte Canada is a stunner.
Canada’s securities regulators want to design a binding dispute resolution process that would require investment firms to pay monetary fines if it is determined they committed wrongdoing against retail investors.
The DST would be a 3-per-cent tax on certain revenue earned by large businesses from certain digital services. It is primarily aimed at large digital service providers such as Amazon, Google, Netflix and Spotify.
The shareholders are restless. During the 2023 proxy season, Canadian companies found themselves in the crosshairs of a record-breaking 69 shareholder activist campaigns, according to Kingsdale Advisors, a Toronto-based consulting company that for two decades has advised public companies on governance, transactions and shareholder relations.
Canada is fighting financial crime in fits and starts. The federal government conveyed this week that money laundering, terrorist financing and evasion of sanctions are “real threats” that harm the “integrity of our financial system and have real costs for the Canadian economy.”
Canadian Imperial Bank of Commerce reported a jump in fourth-quarter profit on Thursday, as a strong performance from its capital markets unit helped offset the hit from bigger provisions. The bank reported adjusted net income of $1.52 billion, or $1.57 per share, for the three months ended Oct. 31, compared with $1.31 billion, or $1.39 per share, a year earlier
An independent evaluation in 2022 led by York University law professor Poonam Puri concluded that the current structure where OBSI’s only power is to “name and shame” investment dealers that don’t abide by its rulings “provides an economic incentive for both parties to settle for amounts below OBSI’s recommendation.”
Bloomberg - Randy Thanthong-Knight and Derek Decloet (2023-11-30)
Canadian house prices that remain elevated due to record population growth — but despite restrictive monetary policy — complicate the Bank of Canada’s inflation fight, a top economist said.
The bank's expenses rose to $5.5 billion during the quarter, an increase of 22 per cent. The bank attributed its surging costs to "higher personnel costs, technology-related costs, performance-based compensation, business and capital taxes, share-based compensation, advertising and the unfavourable impact of foreign currency translation."
Some of the banks, which also include Societe Generale SA and ABN Amro Bank NV, have also raised concerns that SBTi's greenhouse gas emissions target-setting demands are too hard to meet, the sources added.
A Bloomberg gauge of global sovereign and corporate debt has returned 4.9% in November, heading for the biggest monthly gain since it surged 6.2% in the depths of the recession in December 2008.
The tech giant recently sent a proposal to the Wall Street bank to exit the contract in the next 12 to 15 months, the report said, citing people briefed on the matter. Apple and Goldman had started to roll out a virtual credit card in 2019.
Billionaire investor Bill Ackman is betting the Federal Reserve will begin cutting interest rates sooner than markets are predicting.The Pershing Square Capital Management founder said such a move could happen as soon as the first quarter. Traders are fully pricing in a rate cut in June, with the chance of a cut happening in May priced at about 80%, according to swaps market data.
Alberta Premier Danielle Smith invoked a measure to defy federal regulations that aim for a net zero electrical grid by 2035, setting up a confrontation between the Canadian province and Prime Minister Justin Trudeau’s government.
The resolution proposed under the Alberta Sovereignty Within a United Canada Act orders provincial government agencies to not enforce or aid in enforcing Canada’s clean electricity regulations, arguing that power generation is the jurisdiction of the provinces under the constitution, not the
Storm clouds are forming. Profits at the Big Six — which include Scotiabank, Toronto-Dominion Bank and Bank of Montreal — are expected to shrink this year as bad debt provisions rise and loan growth slows. Scotiabank kicked off Canadian banks’ earnings season on Tuesday.
NatWest research identified the most prevalent scams which all feature in the game. The most popular being phishing, vishing and smishing scams, impersonation scams, and refund scams.
Thousands of HSBC customers in the UK have been unable to access online and mobile banking services, preventing them from authorising online card purchases on Black Friday.
The homeownership rate for young adults has spiraled lower within a span of ten years. Between 2011 and 2021, the ownership rate for those between 25 and 44 has dropped at least 5 points. A decline was also seen for people aged 45 to 74 years old, but not to the same extent.
Canadian businesses rejected by banks are increasingly turning to private lenders for financing, as demand for capital outstrips supply in the traditional debt market.
Secured creditor Toronto-Dominion Bank reluctantly went along with reprieve. It was TD's decision earlier this month to call in $5.5 million in loans that triggered the creditor protection proceedings.
"I really recognize that with interest rates having gone up very quickly, there are many, many Canadians who are concerned about their mortgages going up. They are concerned about being able to afford to stay in their own homes," Freeland said. "What we're saying today is we understand this is a challenging situation and we are here to help."
But nations experiencing the fastest increase in emissions are also those facing the biggest hurdles when it comes to accessing private capital. With that in mind, a key goal of the COP28 talks will be to come up with so-called blended finance models, whereby private investors get incentives to join public institutions in committing capital to climate projects, without the terms becoming too onerous for debtor nations.
"My technical target for gold is $2500/oz, and it looks appealing to be long precious metals given falling real rates, rising cycles and ongoing geopolitical conflict," said Newton.
Credit losses and expense controls will be closely watched when Canada’s big banks begin to roll out fourth-quarter earnings on Nov. 28, results that come as households and businesses contend with higher interest rates and the economic outlook casts a cloud over revenue growth expectations.
“The market is anchored on higher losses in (fiscal) 2024” as the economic outlook dims, Holden wrote, adding that fourth quarter results and management commentary are unlikely to change that view.
Reuters - Sinead Cruise and Carolyn Cohn (2023-11-28)
"We had it really good in the last 25 years but now financing costs are higher and returns will have to come either from rental growth, or from adding value to properties," Jose Pellicer, head of investment strategy at M&G Real Estate said.
“The key trend in the banking industry right now is really the decrease in lending across the Canadian market,” said Shilpa Mishra, managing director in BDO’s capital advisory services.
Banks that are on the list face added capital requirements and extra supervisory attention on the basis that they are large and/or interconnected enough that their failure could have consequences for the global financial system.
Their optimistic scenario, where things are better than expected, doesn’t show much of an improvement. A booming economy is only expected to push home prices 1.3% higher over the next 12 months. The medium-term outlook expects compound annual growth of 4.2% for the following 48 months.
Alongside the proposed changes to dispute resolution, the government said that boosting the maximum penalty for securities violations will create a more effective deterrent, and more closely align Saskatchewan’s regime with other Canadian jurisdictions.
“We’re putting in place a simple, easy to understand regime so investors can judge whether funds meet their investment needs — this is a crucial step for consumer protection as sustainable investment grows in popularity,” said Sacha Sadan, director of environmental, social and governance at the FCA, in a release.
Munger, who was born in Omaha, Nebraska, dropped out of the University of Michigan to become a meteorologist in the Army during World War II, but later earned a law degree from Harvard. Munger moved to California after graduating from Harvard in 1948, and practiced real estate law before founding the law firm Munger, Tolles & Olsen in 1962, where he then managed investments at a hedge fund he also founded that year called Wheeler, Munger & Co., according to CNBC.
At the same time, there’s been this massive flow of capital into impact investment. There is a huge segment of the population that has a strong desire to align their investments with a set of underlying values and impact they want to see in the world. Case in point: Impact investment is now a multi-trillion dollar asset class (depending on who you ask). But a lot of the public funds out there attempting to meet this need leave a lot to be desired from an actual impact perspective. They are mostly “do less harm” - which is a model for socially conscious investment from 10 years ago or more. Today’s model asks: How do I use my capital to affect positive change?
Argentina’s President-elect Javier Milei said on Friday that the closure of the country’s central bank, a signature campaign pledge, was a “non-negotiable matter”, according to a statement from his office posted on social media platform X.
Canada’s banks are expected to book weaker profits, capping off a fiscal year marked by spiking expenses, rising capital requirements and higher provisions for potentially bad loans.
In his first remarks to investors as the new head of Bank of Nova Scotia, newly minted chief executive officer Scott Thomson zeroed in on the lender’s beleaguered international business.
Home sales that reached a peak of 64,000 in early 2021 are now down 45 per cent, said Canadian Imperial Bank of Canada’s housing market outlook. That’s 12 per cent below their pre-pandemic 10-year average.
It’s the latest lesson on the dangers of market timing. Investors wanted exposure to companies with a history of paying out profits as a precaution amid the Federal Reserve’s most aggressive tightening cycle in 40 years. Instead they were saddled with underperforming companies that proved especially vulnerable when yields shot higher.
After broadly failing to predict the equity rally in 2023, market forecasters have turned more optimistic about the outlook for next year as investor sentiment improves and expectations of a recession are dialed back.
Yahoo Finance - Gautam Naik and Saijel Kishan (2023-11-27)
Stotzel said he’s “worried we’ll get an AI blowback,” which he describes as a situation in which something unexpected triggers a meaningful market decline. “It takes just one incident for something to go wrong and the material impact could be significant,” he said.
Yahoo Finance - Ben Westcott and Swati Pandey (2023-11-27)
The move is another step by Chalmers to overhaul Australia’s central bank and its culture by installing someone from an offshore institution. The RBA has historically promoted internally and has been criticized for being overly insular and lapsing into group think.
The company as part of a plea deal agreed to pay more than $4.3 billion. Zhao has agreed to pay a $150 million penalty to the U.S. Commodity Futures Trading Commission, and prosecutors in a Wednesday filing said he faces up to 18 months in prison.
Bloomberg - Cristiane Lucchesi and Daniel Cancel (2023-11-27)
Brazilian retailer Americanas SA reached an agreement with bank creditors to overhaul some of its debt, in a key step toward eventually exiting bankruptcy protection.
A government-led body will supervise the open banking system, enforce its rules, accredit institutions and update technical standards. The Department of Finance aims to adopt the legislation and implement the governance framework by 2025.
“The trusts can also provide an alternative business succession option for retiring business owners, especially since more than 75% of small business owners plan to exit their business in the next decade,” the economic statement said.
Australia’s younger adults are increasingly embracing buy now, pay later services, with more than 40% of 18 to 39 year olds holding installment loans in the past year, a sharp uptick from the 2019 figure, according to a Reserve Bank of Australia survey.
Social commerce has taken off with strong Gen Z adoption and an expected 34% annual growth rate in Western Europe looking towards 2025, according to figures from Deloitte.
The right starting partner for Amazon to sell cars online is a brand that is as true to utilitarianism as Amazon is, a brand that consumers can understand right from the get-go because, cognitively, the idea of buying a car online is already a big enough adjustment for most consumers.
As mentioned in the notice published on October 4, 2023, our new Supervisory Framework, which will come into effect on April 1, 2024, represents a comprehensive update to how we supervise federally regulated pension plans (FRPPs) and federally regulated financial institutions (FRFIs). The new framework will apply to both FRPPs and FRFIs and recognizes the specific nature of the different industries we regulate.
CBC - Stephanie Kampf, David Common, Katie Pedersen (2023-11-24)
AFG charged Clarke for the work using a legal tool to place a financial claim against her home in Ontario — it's called a Notice of Security Interest (NOSI). A NOSI can be registered on the title of a property by companies when they finance or lease equipment on a property as a form of assurance that the contract will be paid.
“The housing market in Canada is in recessionary territory, as it faces its most significant test since the 1991 recession,” said CIBC economists Benjamin Tal and Katherine Judge.
Canada may not be broken but the federal government is all but broke and is clearly running out of steam. With a weak economy growing only a little faster than population, there is not a lot of spending room left, not unless deficits and debts are cranked up again. As it is, debt as share of GDP jumps from 41.7 per cent in fiscal year 2022/23 to 42.4 per cent in 2023/24. So much for the fiscal anchors we were promised.
The premiers’ letters, arguably, make for good politics: There is little to lose, and central bankers are an easy target. And besides, the premiers have no formal sway over monetary policy, anyway, so why not try to score some points with voters?
"Almost two-thirds of savings banks and credit cooperatives now have unrealised losses throughout their banking book, which comprises loans as well as securities," Buch said in a statement. "Life insurers are in a similar situation."
Barclays Plc is working on plans to reduce costs by as much as £1 billion ($1.3 billion) over several years, which could involve slashing as many as 2,000 jobs, according to Reuters.
A combination of spending and transfers to households helped produce excess consumption. Scotiabank estimates 200 basis points (bps), or 2 points, of the 475 bps increase to the overnight rate was due to government spending. They found that government consumption has outpaced gross domestic product (GDP) significantly since 2019. It doesn’t exactly look like a smart decision, since it’s failing to drive the growth one expects.
The annual TFSA dollar limit is indexed to inflation and rounded to the nearest $500. The CRA’s indexation increase for 2024 is 4.7%, down from 6.3% in 2023.
“For years, Binance allowed users to open accounts and trade without submitting any identifying information beyond an email address,” the Justice Department said.
Bank of Canada Governor Tiff Macklem said borrowing costs may now be “restrictive enough” to get inflation under control, his most explicit comments to date suggesting that interest rates have peaked.
Ottawa wants Canadian pension funds to invest a larger share of their assets in Canada and is promising measures to make it a more attractive option, as advocates for raising domestic investment have clashed with pension managers intent on guarding their independence.
It was Sunday night of the Labour Day long weekend, and over the previous 60 hours, the CEO of Bank of Montreal had been fixated on a finely choreographed operation playing out across 24 U.S. states: the conversion of 1.8 million customer accounts and more than 500 branches from Bank of the West to BMO.
Binance chief Changpeng Zhao stepped down and pleaded guilty to breaking U.S. anti-money laundering laws as part of a $4.3 billion US settlement resolving a years-long probe into the world's largest crypto exchange, prosecutors said on Tuesday.
The Trans Mountain Pipeline expansion project, stretching from Alberta to British Columbia, is expected to start operating in the first quarter of 2024. It’s set to ship an extra 590,000 barrels per day of crude to the West Coast.
Yahoo Finance - Cagan Koc and Diederik Baazil (2023-11-23)
Wilders’s victory presents a challenge to the European Union project in one of the bloc’s six founding members as the world braces for the potential return of Donald Trump after next year’s US election.
Canadian home prices are likely to fall twice as much as previously expected, according to economists at Toronto-Dominion Bank, as persistently high borrowing costs and an unexpected surge in listings puts more downward pressure on the market.
Germany's financial firms may be well capitalised now but face challenges ranging from rising interest expenditure and weak loan demand to unrealised losses, Bundesbank Vice President Claudia Buch said on Wednesday.
"While cards make a tremendous contribution to the payments landscape, we heard notable dissatisfaction with the cost of card schemes on the part of shops, services, and other merchants – which may be in part due to a lack of choice or digital alternatives to the existing card schemes," the review said.
Royal Bank of Canada wanted to return to the US personal and commercial banking business, and City National Bank seemed to have it all: wealthy Hollywood clients, a foothold in the massive California market and a long history of churning out profits.
A quirk in retirement fund accounting is making corporate pensions look particularly flush now, giving them more incentive to cut risk by dumping equities and buying bonds.
Like the private credit fund Wealthsimple launched in March with Sagard, the private equity fund is open-ended, with quarterly redemptions up to a limit of 5% of the fund’s assets. The management fee is 1.5%, with a 12.5% performance fee that kicks in at an 8% hurdle.
Indian country, and the politicians roaming within it, is awash in talk about the loan guarantee program announced by the federal government on Tuesday and the panacea they represent for First Nations anxious to gain a foothold in energy and infrastructure projects as full, equity partners.
Long before Ilya Sutskever moved to oust OpenAI chief executive Sam Altman, throwing the world’s most prominent artificial intelligence company into chaos...
Canada’s inflation rate slowed markedly in October, bolstering views on Bay Street that the Bank of Canada is done raising interest rates and will start to cut them next year.
Finance Minister Chrystia Freeland announced billions in spending on Tuesday, in a housing-focused fall economic statement that also set a new cap on the size of future deficits, pledging to keep them at no larger than 1 per cent of gross domestic product.
He said consumers who opt for a fixed-rate mortgage with a shorter term will pay more in interest than those that choose a long-term fixed-rate loan. Homeowners have to be strategic in choosing the type of mortgage to make sure they're able to save money, he said.
As first reported by CBC News, the federal government's fall fiscal update includes $16 billion in funding to build rental and social housing, along with targeted measures to combat inflation. All in, new spending will total about $21 billion as the government faces another whopping deficit.
San Francisco-based OpenAI said in a statement late Tuesday: “We have reached an agreement in principle for Sam Altman to return to OpenAI as CEO with a new initial board" made of former Salesforce co-CEO Bret Taylor, former U.S. Treasury Secretary Larry Summers and Quora CEO Adam D’Angelo.
Yahoo Finance - Jack Wittels, Yongchang Chin and John Ainger (2023-11-22)
Under the regulation, which takes effect Jan. 1, vessels going into and out of EU ports must pay for their carbon pollution, affecting deliveries of everything from container loads of finished goods to the liquefied natural gas needed to keep homes warm in winter.
Binance chief Changpeng Zhao on Tuesday stepped down and pleaded guilty to breaking U.S. anti-money laundering laws as part of a $4.3 billion settlement resolving a years-long probe into the world's largest crypto exchange, prosecutors said.
Citigroup Inc. is in discussions to start a new direct-lending strategy by early January, the latest in a series of bank efforts to gain a foothold in the booming $1.6 trillion private credit market.
“The whole point of creating statutory priorities is to alert the world regarding the distribution scheme for a given fund. The idea is to create certainty so that claimants understand where they stand relative to other claimants. A clear priority scheme also makes it easier for courts to adjudicate competing claims,” the appeal court said.
Operating in a ring-fenced environment and involving a digital currency that is a real claim on the Reserve Bank, 14 pilot projects with a range of industry participants investigated potential CBDC use cases.
There may be lies, damned lies, and statistics as Mark Twain posited. But statistics, as flawed as they may be, are all we have to go by. And the statistics show a Canadian economy that very likely has already slipped into a recession, even as Tiff Macklem doth protest too much.
Consumer debt and credit delinquencies are on the rise as high interest rates, skyrocketing housing costs and inflation take a toll on Canadian borrowers, according to a third-quarter report from credit-rating agency Equifax Canada. Credit counsellors say they expect those effects will worsen in coming months and years.\nRebecca Oakes, vice-president of advanced analytics at the firm, said credit card debt rose significantly and drove increases in overall debt in the third quarter of 2023, a concerning trend that leaves Canadians vulnerable to high interest rates.
Operating in a ring-fenced environment and involving a digital currency that is a real claim on the Reserve Bank, 14 pilot projects with a range of industry participants investigated potential CBDC use cases.
Westbank Corp., a prominent Canadian developer known for its ambitious architecture, is facing problems at several projects in Toronto and Seattle with contractors claiming millions of dollars in unpaid bills.
“We expect the Bank of Canada (BoC) to remain on hold with the overnight rate at five per cent. The economy remains weak as shown by the GDP contraction in 3Q (-1.2 per quarter-over-quarter seasonally adjusted annual rate) and the output gap is closing.
The concern is if higher interest rates further dampen demand the ratio will slip to levels not seen since the deep housing market downturn in the late 1980s to mid-1990s, said TD economist Rishi Sondhi. Sales-to-new-listings ratios measure supply and demand in housing markets and help predict prices. A ratio under 40 per cent means a buyer’s market where new listings exceed sales, between 40 and 60 per cent is a balanced market and over 60 per cent, where demand outstrips supply, is a seller’s market. During the late 1980s and early 1990s, home prices plunged by 32 per cent across Ontario, falling 38 per cent in the Greater Toronto area. The economic backdrop is also better. From March 1990 to May 1992, Canada was in a deep recession, brought on by high interest rates and fiscal belt-tightening, among other forces. Ontario GDP and employment dropped 6 per cent peak to trough.
Greater Toronto real estate prices continue to fall, now wiping out any gains made over the past year. The TRREB benchmark price shed $22.3k to hit $1.08 million in November. The City of Toronto benchmark fell $19k to $1.06 million. Both measures are virtually unchanged from last year, with the brief period of gains made earlier this year now totally wiped out.
MPs have also urged the Government to alleviate privacy concerns around the misuse of personal data through robust regulation and legislated protections.
In addition to servicing the existing mortgages, Nesto will also be responsible for the Canada Life mortgages at maturity.\nThe partnership follows Canada Life’s 2022 decision to withdraw from the residential mortgage market.
And as banks set aside hundreds of millions more in reserves for bad loans, are there risks to Canada’s economy and financial institutions? Ron Butler, mortgage broker at Butler Mortgage and host of the Angry Mortgage Podcast, explains.
The extent to which FHLBs finance insurers has not been previously reported. Reuters interviews with more than a dozen industry executives and regulators, a review of regulatory disclosures and data show this borrowing has not been matched by a rise in home loan affordability, with the cost of mortgages soaring to its highest in 23 years.
The Desjardins report, using data from analytics firm AirDNA, said Canada has more than 235,800 unique active short-term rental listings on Airbnb and Vrbo, the two largest hosting platforms, amounting to about 1.4% of the country’s housing stock.
The Bank of Canada is expected to cap another tumultuous year for monetary policy with a stand-pat decision this week that keeps interest rates steady while offering few hints about what comes next.
Today, the average APR for the benchmark 30-year fixed mortgage fell to 7.52% from 7.57% yesterday. One week ago, the 30-year fixed APR was 7.69%. Meanwhile, the average APR on a 15-year fixed mortgage sits at 6.71%. At this same time last week, the 15-year fixed-rate mortgage APR was at 6.97%. And the average APR on the 30-year fixed-rate jumbo mortgage is 7.57%. Last week, it sat at 7.72%
Canadians heading into retirement are in a great position, said no one ever. But even by this usual standard of negativity, a new report on retirement by Deloitte Canada is a stunner.
Canada is fighting financial crime in fits and starts. The federal government conveyed this week that money laundering, terrorist financing and evasion of sanctions are “real threats” that harm the “integrity of our financial system and have real costs for the Canadian economy.”
Bloomberg - Randy Thanthong-Knight and Derek Decloet (2023-11-30)
Canadian house prices that remain elevated due to record population growth — but despite restrictive monetary policy — complicate the Bank of Canada’s inflation fight, a top economist said.
The homeownership rate for young adults has spiraled lower within a span of ten years. Between 2011 and 2021, the ownership rate for those between 25 and 44 has dropped at least 5 points. A decline was also seen for people aged 45 to 74 years old, but not to the same extent.
Credit losses and expense controls will be closely watched when Canada’s big banks begin to roll out fourth-quarter earnings on Nov. 28, results that come as households and businesses contend with higher interest rates and the economic outlook casts a cloud over revenue growth expectations.
“The market is anchored on higher losses in (fiscal) 2024” as the economic outlook dims, Holden wrote, adding that fourth quarter results and management commentary are unlikely to change that view.
Reuters - Sinead Cruise and Carolyn Cohn (2023-11-28)
"We had it really good in the last 25 years but now financing costs are higher and returns will have to come either from rental growth, or from adding value to properties," Jose Pellicer, head of investment strategy at M&G Real Estate said.
Their optimistic scenario, where things are better than expected, doesn’t show much of an improvement. A booming economy is only expected to push home prices 1.3% higher over the next 12 months. The medium-term outlook expects compound annual growth of 4.2% for the following 48 months.
Argentina’s President-elect Javier Milei said on Friday that the closure of the country’s central bank, a signature campaign pledge, was a “non-negotiable matter”, according to a statement from his office posted on social media platform X.
Home sales that reached a peak of 64,000 in early 2021 are now down 45 per cent, said Canadian Imperial Bank of Canada’s housing market outlook. That’s 12 per cent below their pre-pandemic 10-year average.
Yahoo Finance - Ben Westcott and Swati Pandey (2023-11-27)
The move is another step by Chalmers to overhaul Australia’s central bank and its culture by installing someone from an offshore institution. The RBA has historically promoted internally and has been criticized for being overly insular and lapsing into group think.
CBC - Stephanie Kampf, David Common, Katie Pedersen (2023-11-24)
AFG charged Clarke for the work using a legal tool to place a financial claim against her home in Ontario — it's called a Notice of Security Interest (NOSI). A NOSI can be registered on the title of a property by companies when they finance or lease equipment on a property as a form of assurance that the contract will be paid.
“The housing market in Canada is in recessionary territory, as it faces its most significant test since the 1991 recession,” said CIBC economists Benjamin Tal and Katherine Judge.
Canada may not be broken but the federal government is all but broke and is clearly running out of steam. With a weak economy growing only a little faster than population, there is not a lot of spending room left, not unless deficits and debts are cranked up again. As it is, debt as share of GDP jumps from 41.7 per cent in fiscal year 2022/23 to 42.4 per cent in 2023/24. So much for the fiscal anchors we were promised.
The premiers’ letters, arguably, make for good politics: There is little to lose, and central bankers are an easy target. And besides, the premiers have no formal sway over monetary policy, anyway, so why not try to score some points with voters?
A combination of spending and transfers to households helped produce excess consumption. Scotiabank estimates 200 basis points (bps), or 2 points, of the 475 bps increase to the overnight rate was due to government spending. They found that government consumption has outpaced gross domestic product (GDP) significantly since 2019. It doesn’t exactly look like a smart decision, since it’s failing to drive the growth one expects.
Ottawa wants Canadian pension funds to invest a larger share of their assets in Canada and is promising measures to make it a more attractive option, as advocates for raising domestic investment have clashed with pension managers intent on guarding their independence.
Yahoo Finance - Cagan Koc and Diederik Baazil (2023-11-23)
Wilders’s victory presents a challenge to the European Union project in one of the bloc’s six founding members as the world braces for the potential return of Donald Trump after next year’s US election.
Canadian home prices are likely to fall twice as much as previously expected, according to economists at Toronto-Dominion Bank, as persistently high borrowing costs and an unexpected surge in listings puts more downward pressure on the market.
Canada’s inflation rate slowed markedly in October, bolstering views on Bay Street that the Bank of Canada is done raising interest rates and will start to cut them next year.
Finance Minister Chrystia Freeland announced billions in spending on Tuesday, in a housing-focused fall economic statement that also set a new cap on the size of future deficits, pledging to keep them at no larger than 1 per cent of gross domestic product.
He said consumers who opt for a fixed-rate mortgage with a shorter term will pay more in interest than those that choose a long-term fixed-rate loan. Homeowners have to be strategic in choosing the type of mortgage to make sure they're able to save money, he said.
As first reported by CBC News, the federal government's fall fiscal update includes $16 billion in funding to build rental and social housing, along with targeted measures to combat inflation. All in, new spending will total about $21 billion as the government faces another whopping deficit.
FP - Doug Chandler and Bonnie-Jeanne MacDonald (2023-11-20)
Until now, as discussed in our earlier article, the obstacle to informed debate has been uncertainty around the size of the asset transfer. In addition to the challenge of interpreting the legislation, there are significant problems with the data that Alberta’s consultants used to determine that Alberta would be entitled to 53 per cent of the entire CPP fund. The allocation of CPP benefits and contributions depends on the province of employment, but the only readily available data were byprovince of residence, leading to data errors whenever Canadians move from province to province or commute across provincial boundaries for work.
Rising U.S. government debt and fiscal deficits that have helped lift government bond yields this year will likely become secondary factors for investors, as their focus shifts to economic fundamentals, Citi analysts said.
Monetary policy in Canada wouldn’t be as restrictive if elected officials had restrained their spending in recent years, according to economists at the Bank of Nova Scotia.
Now, Lagarde argued, is the time for a “top down” approach, similar to the creation of the U.S. Securities and Exchange Commission (SEC) in the 1930s, which “played a pivotal role in suppressing state efforts to fragment securities markets.”
EU regulators will challenge banks over their failure to properly apply an accounting rule aimed at making sure their provisioning for souring loans is timely and sufficient, the bloc's banking watchdog said on Friday.
This letter informs you of changes made to the Administrative Procedures for Late and Erroneous Filing Penalty (LEFP) Framework effective for fiscal year end 2023.
Yahoo Finance - Karin Matussek and Kamil Kowalcze (2023-11-15)
The Federal Constitutional Court ruled that the shifting of €60 billion ($65.2 billion) earmarked to tackle the Covid-19 pandemic into an off-budget fund violated German constitutional law. The challenge was filed by lawmakers from the main opposition conservative alliance, who said they wanted to ensure the sustainability of the country’s public finances.
For one, the OIB is being pitched as a silver bullet for funding the province’s infrastructure needs – as if all that’s necessary is to set out public funds and guarantees, and the private sector will follow.
Canadians need to be prepared for the growing likelihood that interest rates won’t return to the low levels seen over the past 15 years, ^p senior deputy governor Carolyn Rogers warned Thursday.
In a speech in Vancouver, the central bank’s second-in-command said that many of the economic forces that pulled down interest rates in recent decades are going into reverse. That “new normal” creates risks for indebted households, businesses and the broader financial system, which need to be managed proactively, she said.
“It may be tempting to believe the low rates that we all got used to will eventually come back. But there are reasons to think they may not,” Ms. Rogers said.
She pointed to tectonic shifts in the, including a retirement wave among baby boomers and changing patterns of global trade and investment.
“We also look now to be in an era of higher levels of government debt. And geopolitical risks, such as an escalation of the war in Ukraine or the war in Israel and Gaza, could push rates higher globally – if they were to affect energy prices and supply chains in ways that could have a lasting impact on inflation,” she said.
The Bank of Canada has raised interest rates 10 times over the past year and a half to fight runaway inflation. That’s brought the bank’s benchmark policy rate to 5 per cent, the highest level since 2001.
Ms. Rogers avoided talking about the near-term path for interest rates. But her comments suggest that when the bank does eventually start lowering rates – something many Bay Street analysts expect to begin around the middle of next year – it may not lower them all that much.
This has major implications for
The Conservatives introduced a private member’s bill Thursday in the House of Commons that calls on the federal government to move ahead with its delayed rollout of an open banking system.
The government had previously promised an early-2023 launch for open banking, but has not yet put forward an implementation plan. The bill, if passed, would require Finance Minister Chrystia Freeland to release such a plan. Open banking has also faced delays in the U.S., Britain and Australia, as they forge ahead with their own efforts.
Open banking is a term for a new set of rules that would enable financial institutions to exchange information more efficiently and securely. The purpose of such a system is to provide consumers with more control over how they share their financial data, making it easier for them to switch banks – sometimes a difficult process in Canada’s highly saturated financial industry.
Financial technology companies have long urged the government to implement open banking, in part because it would lower the barrier to entry for new players in Canada’s tight sector, where the Big Six banks dominate more than 90 per cent of the market.
“In Ottawa, things just move as fast as they’re pushed,” Mr. Poilievre said. “They had a lot of time to study this, they have an army of policy analysts over at Finance Canada. They can do it if they put their minds to it.”
Prime Minister Justin Trudeau’s government is likely to sell more short-term debt in the next couple of years as it grapples with growing deficits at a time of higher rates, according to Desjardins Group.
Canada’s federal housing agency is preparing a sale of as much as C$8.5 billion ($6.2 billion) in bonds as soon as next week, according to people familiar with the matter.
(BoC) to start cutting its key policy rate from a 22-year high of 5.00 per cent in April 2024, a month later than the previous forecast, according to a survey released by the central bank on Monday.", "The survey showed a median of 27 financial participants expect interest rates to drop to 4.00 per cent in the fourth quarter of 2024, up from an expectation of 3.50 per cent in the previous survey released in July.
A lot of Canadians may be ready to vote for cheaper mortgages, according to this poll. A third (33%) of non-Liberal voters would consider changing their vote if rates fell. The share that would change their vote was higher for former Liberal (44%) and NDP (40%) voters. That’s a lot of votes considering just a third of Canadians have a mortgage.
The BCAR is to be completed using the methodologies and calculations described in OSFI's Capital Adequacy Requirements (CAR) Guideline (the "guideline") and, if applicable, OSFI's Total Loss Absorbing Capacity (TLAC) Guideline. The BCAR instructions should be read in conjunction with the CAR and, if applicable, TLAC guidelines.
Texas Republicans picked a fight with Wall Street over investment policies on firearms and oil in 2021, passing two laws that restricted public contracts with financial firms that “boycott” the fossil fuel sector or “discriminate” against gunmakers. The laws have upended bond deals and led to multiple probes into corporate policies, the latest of which was launched by Attorney General Ken Paxton last month to review 10 financial companies, including JPMorgan.
Ontario plans to invest C$3 billion ($2.2 billion) into creating an arm’s-length infrastructure bank with a mandate to help build major projects in affordable housing, health care and transportation.
If the governments follow through with their spending plans for 2024, it would mean “government spending is starting to get in the way of getting inflation back to target,” Macklem told a Canadian Senate committee.
The U.S. Federal Reserve kept its key short-term interest rate unchanged Wednesday for a second straight time but left the door open to further rate hikes if inflation pressures should accelerate in the months ahead.
Yahoo Finance - Steve Scherer, Fergal Smith (2023-11-01)
Trudeau now faces his lowest poll numbers since taking power, but unlike 2015, deficit spending cannot provide relief for his declining popularity without complicating the Bank of Canada's (BoC's) efforts to quell inflation.
Governor Tiff Macklem said the central bank could begin cutting interest rates before inflation is all the way back to target, although he said that discussion about loosening monetary policy is still a ways off.
Bank of Canada Governor Tiff Macklem urged elected officials to consider the inflationary consequences of their spending plans as the central bank tries to cool price pressures.
“I’m very pleased to have Nick join us in this new and important role,” said Governor Tiff Macklem. “Nick brings extensive experience in organizational leadership and strategic planning, as well as a deep knowledge of economics and the Canadian economy. He will be a valuable addition to the Bank as we continue our efforts to fulfill our mandate to promote the economic and financial welfare of Canadians.”
With clearer evidence that monetary policy is working, my colleagues on the Bank’s Governing Council and I judged last week that we could be patient and hold the policy rate at 5%. However, to be confident that our policy rate is high enough to get inflation back to 2%, we need to see more easing in our measures of core inflation. We will continue to assess whether monetary policy is sufficiently restrictive to restore price stability, and we will monitor risks closely.
“The economy is not overheated anymore and ... we do think there’s more inflation relief in the pipeline, and if that comes through, we won’t have to raise rates further,” Macklem said in a CBC Radio interview aired on Thursday.
After 10 interest rate increases during the past year and a half, the bank says supply and demand in the Canadian economy are “now approaching balance” – a prerequisite for stabilizing prices.
The CRA charges interest and compounds it daily on late payments. The interest rate the CRA charges on current or previous overdue balances changes each quarter if the prescribed rate for overdue tax changes.
We held our policy rate steady today because monetary policy is working to cool the economy and relieve price pressures, and we want to give it time to do its job. But further easing in inflation is likely to be slow, and inflationary risks have increased.
Bank of Canada Governor Tiff Macklem warned three provincial premiers last month that their calls for a stop to interest-rate hikes could undermine public confidence in the independence of the central bank.", "In early September, the premiers of Newfoundland and Labrador sent public letters to Mr. Macklem urging him to stop tightening monetary policy. Ontario Premier Doug Ford followed up with a second letter this past weekend, asking the bank to hold off rate hikes at its coming rate decision on Wednesday.", "Mr. Ford issued this second call despite receiving a letter from Mr. Macklem on Sept. 13, in which the central bank governor expressed concern about interventions from premiers, which he said could create a perception of political interference with the bank. The contents of Mr. Macklem’s letter were first reported by The Canadian Press on Tuesday.", "The central bank sets", " and makes other monetary policy decisions independently from the government. This allows it to make politically unpopular decisions that are sometimes needed to keep inflation under control.", "“While I am very pleased to get your perspectives on the impact of our policy decisions, instructions or requests from elected officials about how we should set interest rates could create the impression that the ", "s operational independence is at risk,” Mr. Macklem wrote in identical letters sent to Mr. Ford, B.C. Premier David Eby and Newfoundland Premier Andrew Furey.", "“I am sure you agree that this would be unfortunate,” Mr. Macklem wrote. “Operational independence is critical to the legitimacy of the central bank, and to the effectiveness of monetary policy as a means to achieve price stability.”", "Over the past two years, politicians from across the political spectrum have criticized Mr. Macklem and his team, first for failing to foresee and prevent the rise of inflation, then for rapidly increasing Canadian interest rates to get prices back under control.", "The aggressive monetary policy tightening campaign is helping bring down inflation, which has fallen from an annual rate of 8.1 per cent last summer to 3.8 per cent in September. But it’s also squeezing household budgets, raising mortgage expenses and pushing up unemployment – all while sharply increasing government debt-servicing costs.
Higher global oil prices have driven up gasoline prices, and we now expect oil prices to remain higher than we assumed in July. Inflation in shelter prices is running above 6%. Part of this is due to higher mortgage interest costs following increases in our policy interest rate. But it also reflects higher rents and other housing costs, and these pressures are more related to the structural shortage of housing supply. Finally, near-term inflation expectations and wage growth remain elevated, and corporate pricing behaviour is normalizing only slowly. All this is making underlying inflation more persistent.
The exchange between Macklem and the premiers is the latest example of the heightened political scrutiny the Bank of Canada has faced for its policy decisions post-pandemic, when the country faced its highest levels of inflation in 40 years.
The Bank of Canada (BoC) will leave interest rates on hold on Wednesday as the economy stalls, analysts said, though many see the central bank warning that future hikes are still possible with inflation hovering well above its 2% target.
B.C. Premier David Eby said in a letter Friday signed by all the premiers that small businesses, like most other Canadians, are feeling squeezed by the rising cost of housing, groceries and other daily essentials, and just when they are starting to recover after the pandemic they are facing higher inflation and interest rates.
The aging computer systems that deliver billions of dollars in direct benefits such as Old Age Security and Employment Insurance are at risk of failure, says Auditor-General Karen Hogan, adding that plans to update them are behind schedule and over budget.
"Conservative Leader Pierre Poilievre is calling for the federal government to reject Royal Bank of Canada’s ", " proposed takeover of HSBC Bank Canada, saying the deal would reduce banking competition at a time when homeowners are struggling with high borrowing costs.", "In an interview with The Globe and Mail Thursday, ", " said blocking the deal is a clear step the government could take to address affordability concerns.", "“If the biggest bank in Canada simply buys up a growing smaller player, then there’s no hope of ever having more competition in Canadian banking,” he said.
Alberta Premier Danielle Smith traded barbed letters on Wednesday as Mr. Trudeau warned the province’s proposal to withdraw from the Canada Pension Plan would harm pensioners, and pledged that his government will “do everything possible” to keep the CPP intact.
It means that the U.K.’s inflation rate remains more than three times higher than the Bank of England’s target rate of 2%. The bank, though, is not expected to raise interest rates at its next policy meeting in early November, opting instead to keep its main borrowing rate unchanged at the 15-year high of 5.25%.
Freeland says she has instructed the Financial Consumer Agency of Canada to work on making more no-fee and low-cost bank accounts available to Canadians.
Danielle Smith, Alberta's Premier, joins BNN Bloomberg to discuss the Supreme Court's ruling against Ottawa's environmental impact law, and the possibility of Alberta abandoning the Canada Pension Plan to run its own stand-alone fund.
“It’s not so much about where inflation is now, it’s about where inflation’s going to be,” Macklem said, reiterating that policymakers are watching excess demand, inflation expectations, wages, and corporate pricing closely.
Investment Executive - Nojoud Al Mallees (2023-10-16)
“I think, sadly, what you’re seeing is exactly what inflation does. Inflation erodes confidence in institutions, it erodes confidence in governments. It makes people feel like they’re getting ripped off. We are seeing more strikes in this country, you’re seeing more strikes in other countries. These are symptoms of inflation,” Macklem said.
The European Central Bank has brought interest rates to an appropriate level and should now be patient rather than acting further to fight inflation, according to Governing Council member Francois Villeroy de Galhau.
The criminal probe comes after the province removed land from the protected Greenbelt last year as part of its broader push to build 1.5 million homes by 2031. Last month, Ford walked back his plan to remove large swaths of land from the protected Greenbelt following weeks of public pressure and the resignation of two ministers. He apologized for the land swap and said the lands would all be returned to the Greenbelt.
On Wednesday, Fed officials hiked interest rates by 75 basis points for a fourth-straight time in six months, pushing the key federal-funds rate (that’s the rate at which banks lend to each other, not to consumers or businesses) to a target range of 3.75% to 4%—the highest level since the Great Recession.
A Toronto Uber ", " driver had his bank accounts frozen after the bank became concerned that he inappropriately received more than $4.5-million in COVID-19 aid, according to a recent Ontario court case that sheds light on how unprecedented emergency-relief programs designed to offer businesses a lifeline during the height of the pandemic were abused by some recipients.", "Justice Michael Penny of the Ontario Superior Court of Justice ruled that ", " ", " was right to freeze Rabih George Barake’s accounts, saying that Mr. Barake accessed the government loans by means of fraudulent misrepresentation.", "The case of fraud is one of the few to reach Canadian courts about federal COVID programs for business. These include the Highly Affected Sectors Credit Availability Program (HASCAP) and the Canada Emergency Business Account (CEBA). Money from improperly accessed loans has been left largely unrecovered,", "even as federal auditors have aggressively pursued repayment from pandemic-related aid given to individuals through programs such as the Canada Emergency Response Benefit (CERB).", ":", "In a December report, Auditor-General Karen Hogan said billions of dollars in ineligible COVID benefits are at risk of going uncollected because the federal government is doing a poor job of identifying who should pay back money in aid programs. But her report did not look at COVID loan programs for businesses.
The report shows government revenues were up $2.8 billion, or 2%, which the department says largely reflects higher interest revenues and other non-tax revenues.
Canada’s banking regulator is expanding its mandate to begin probing issues of foreign interference and national-security issues at the country’s largest banks and insurers by early next year.
Marsalek has been on the run from police since the collapse of Wirecard in 2020 after the discovery of massive €1.9 billion black hole in its accounts. He is believed to have fled to Moscow and taken shelter under the protection of the protection of Russian army intelligence unit the GRU.
According to an IMF paper published in 2021, close to 80% of central banks are either not allowed to issue a digital currency under their existing laws, or the legal framework is unclear.
The Bank of England halted its long run of interest rate increases on Sept. 21 as the British economy slowed, but it said it was not taking a recent fall in inflation for granted.
Meanwhile, interest rate futures contracts continue to price in only about a 50% chance of further tightening in 2023, and see a 4.65% policy rate by the end of next year.
The Canada Pension Plan’s investment arm said Alberta’s claim that it could withdraw more than half of the national pension fund’s assets is based on “an invented formula” that is divorced from reality, sharply criticizing the math behind Premier Danielle Smith’s push to set up an alternative provincial pension system.
It was another week where Canada’s leading nationally advertised mortgage rates did absolutely nothing.", "Yet.", "Fixed rates are in imminent danger of climbing because of inflation chugging an energy drink and unexpectedly surging back to 4 per cent. .
But from there the Fed's updated quarterly projections show rates falling only half a percentage point in 2024 compared to the full percentage point of cuts anticipated at the meeting in June. With the federal funds rate falling to 5.1 per cent by the end of 2024 and 3.9 per cent by the end of 2025, the central bank's main measure of inflation is projected to drop to 3.3 per cent by the end of this year, to 2.5 per cent next year and to 2.2 per cent by the end of 2025.
A third-party report compiled by consultant Lifeworks released Thursday calculates that if Alberta gave the required three-year notice to quit CPP next year, it would be entitled to $334 billion, or about 53%, of the national pension plan’s pool by 2027.
Bloomberg - Lucy White and Greg Ritchie (2023-09-21)
Bank of England policy makers will decide on Thursday whether to call a halt to a string of 14 consecutive interest-rate increases, with investors and handful of economists raising doubts about another hike.
Though the latest inflation reading shows price growth heading in the wrong direction, the central bank is also keeping an eye on other economic indicators.
Canada’s annual inflation rate accelerated sharply for the second month in a row, raising the odds that the Bank of Canada could deliver at least one more interest rate increase this year despite hitting pause on monetary policy tightening earlier this month.
In early 2020, Rechie Valdez made a decision. She would leave the banking industry, where she had worked for more than 15 years, to focus full time on her small business: baking desserts and wedding cakes.
According to evidence presented in court, Buyer traded with advance knowledge of the 2018 merger of telecom giants Sprint Corp. and T-Mobile US Inc. after learning of the planned deal from T-Mobile executives.
The Bank of Canada is supposed to be free from government interference, but elected officials have become more vocal about interest rates, inflation and the effect on their citizens, leaving some experts fretting about the central bank’s independence when it comes to monetary policy.
The federal government says it is extending the final repayment deadline for Canada Emergency Business Account loans by one year, though the relief has received a mixed response from small-enterprise groups that say the specifics are insufficient.
German Finance Minister Christian Lindner said at the informal EU finance ministers meeting on Friday that a decision is not expected this week on who will become European Investment Bank (EIB) president.
Central banks take centre stage with five of those overseeing the 10 most heavily traded currencies - including the U.S. Federal Reserve - holding rate-setting meetings, plus a swathe of emerging market ones as well.
In the five years to 2019, Canada’s real per capita growth was an anemic 0.5 per cent per annum. Since 2019, it has been the fifth-weakest of 38 OECD countries – and per capita GDP growth has even turned negative over the past year.
In the 19th century, before scientists understood the causes of most acute and chronic diseases, doctors routinely treated illness by bleeding their patients. Using an array of gruesome techniques (from deliberate wounds to the application of leeches), clinicians thought they could restore a patient’s health by eliminating impure blood.
U.S. bank groups on Tuesday accused the Federal Reserve and other regulators of violating federal laws with a sweeping proposal to raise capital requirements, escalating an assault on the draft rules that were also blasted by bank executives.
The bonds were part of the $114 billion of assets that the Federal Deposit Insurance Corp (FDIC) picked up when it took over SVB and Signature earlier this year, according to the report, which added the bonds were backed by long-term, low-rate loans made primarily to developers building affordable apartments.
The FDIC has also discussed alternatives to cutting the prices on the bonds, including potentially repackaging the debt into new securities, the report said.
Since 1995, Transparency International, an organization that describes itself as “the global coalition against corruption,” has been compiling its annual data.
Pierre Poilievre's Conservatives have made much sport of arguing the Trudeau Liberals' tool to fight climate change has severely affected the affordability of fuel, groceries and other goods. While the Opposition party has never put a number on it, the figure has never appeared to be as rhetorically small as Macklem put it.
Sarah Breeden, the nominee to be Bank of England deputy governor for financial stability, warned that over-zealous monetary tightening could cause an unnecessary recession.
Canadians and the financial markets are often nervous on the day the Governor of the Bank of Canada announces the key interest rate. Not surprising, given the financial consequences for people’s wallets and the impact of this decision on the economy.
"Bank of Canada Governor Tiff Macklem said the central bank’s 2-per-cent inflation target “is now in sight” and that interest rates “may be sufficiently restrictive,” but warned that his team could raise rates again if consumer price growth remains stubborn.
Federal Reserve Governor Christopher Waller said on Tuesday the latest round of economic data was giving the U.S. central bank space to see if it needs to raise interest rates again, while noting that he currently sees nothing that would force a move toward boosting the cost of short-term borrowing again.
Furey's office released a letter to Bank of Canada governor Tiff Macklem in which the premier called on the bank to "more fully consider the negative impacts" interest rate hikes are having on Canadians and to forgo another rate hike "at this time." The bank is expected to announce its next rate decision on Wednesday.
Canada's inflation rate ticked up to 3.3 per cent in July year-over-year, but economists say cracks emerging in the economy will likely sway the central bank against further rate hikes.
The Bank of Canada is likely to hold interest rates steady on Wednesday as policymakers consider whether a slowing economy means it’s time to end its historic campaign to tighten policy.
The Bank of Canada is expected to pause its monetary policy tightening campaign this week, weighing stubborn inflation data against growing evidence that the Canadian economy has begun to stall.
The Bank of Canada is expected to hold its key interest rate steady at 5.00 per cent on Sept. 6 and stay at that level through at least the end of March, 2024, according to a majority of economists in a Reuters poll, with a small but growing minority expecting one more rate rise.
Yahoo Finance - Lucy White and Tom Rees (2023-08-31)
Huw Pill, speaking at the South African Central Reserve Bank biennial conference in Cape Town, said there were multiple paths that monetary policy could take in order to get inflation back to the 2% target.
The sharp escalation of global bond yields in recent weeks raises the prospect we may be in the middle of a structural shift to a world of permanently higher borrowing costs.
The federal government’s plan to sell at least part of the Trans Mountain Expansion Project to Indigenous owners has entered a new stage, with Ottawa indicating it’s prepared to provide financial backing to First Nations and Métis communities to help them acquire ownership stakes in the pipeline, and one group that had been pursuing a stake leaving the field.
Anyone looking for firm direction from the world's most powerful central banker in his much-anticipated speech on Friday in Jackson Hole, Wyo., will inevitably be disappointed.
Yahoo Finance - Matthew Boesler, Catarina Saraiva and Alexander Weber (2023-08-28)
Powell, in his speech, remained vague about whether the Fed would lift its benchmark rate again, though he warned that “additional evidence of persistently above-trend growth could put further progress on inflation at risk and could warrant further tightening of monetary policy.”
The steep jump in public debt loads over the past decade and a half, as governments borrowed large amounts of money to battle the Global Financial Crisis and the fallout from the COVID-19 pandemic, is probably irreversible.
Bloomberg - Matthew Boesler, Catarina Saraiva, and Alexander Weber (2023-08-28)
The world’s top central bankers stressed the need to keep interest rates high until inflation is contained — and wrestled with deeper economic shifts that will make their jobs harder.
The leaders of Brazil, Russia, India, China and South Africa held closed-door discussions Wednesday on the possible expansion of their BRICS economic bloc, a move they’ve framed as a way to amplify the voice of developing nations, but which also serves the geopolitical interests of Beijing and Moscow.
In 2020, Mastercard built a virtual testing platform to help central banks assess and explore national digital currencies. Since then the firm has worked with several central banks on pilots.
Ontario is offering $1.2-billion over three years to municipalities as an incentive to achieve annual housing targets, while also offering to extend the strong mayor powers to more local governments.
While headline inflation was 3.3% in July, food prices were up 7.8% and the central bank’s aggressive hikes mean mortgage interest costs have spiked 30.6%. Record levels of immigration have exacerbated a housing supply shortage, helping boost the benchmark home price to C$754,800 (about $558,000).
Senior officials are also considering the use of tools such as cutting banks’ foreign-exchange reserve requirements to prevent a rapid depreciation in the currency, said the people. The request came as the yuan fell toward 7.35 per dollar, a level that top leadership has been paying close attention to, they added.
According to the minutes, the Fed’s policymakers also felt that despite signs of progress on inflation, it remained well above their two per cent target. They “would need to see more data … to be confident that inflation pressures were abating” and on track to return to their target.
China's major state-owned banks were seen busy selling U.S. dollars to buy yuan in both onshore and offshore spot foreign exchange markets this week, people with direct knowledge of the matter said, in an attempt to slow the yuan's depreciation.
Chair Jerome Powell will deliver a talk on the economic outlook on Aug. 25 at the central bankers’ confab held each year in Jackson Hole, Wyoming by the Kansas City Fed, the U.S. central bank said on Thursday.,The speech, set for 10:05 a.m. ET, will provide a chance to give his latest views on whether more policy tightening will be needed to bring down inflation amid surprisingly strong economic growth, or if enough progress on disinflation has been made to hold rates steady.
"In Argentina, official inflation has hit 113%/yr. STILL TOO LOW. I accurately measure inflation at a whopping 139%/yr ~1.2x the official rate. The solution: mothball the central bank and DOLLARIZE!" Hanke said in a Wednesday post on X.
The minutes of the Federal Reserve's policy meeting last month may indicate on Wednesday how many policymakers feel the U.S. central bank is done raising interest rates and whether possible risks to the economy from the aggressive monetary tightening have taken on more weight in their debate.
The official exchange rate will weaken to 545 per dollar for the end of this year and then slump to 1,193 by the end of 2024, as the bank’s strategists expect the winner of the country’s presidential elections to further devalue the peso starting in December.
In March 2019, the central bank was hauled over the coals by a Common Select Committee in a searing critique of its outmoded technology estate, culture and procurement activities.
Analysts say the weakening of the ruble is being driven by increased defense spending — leading imports to rise — and falling exports, particularly in the oil and natural gas sector. Importing more and exporting less means a smaller trade surplus, which typically weighs on a country's currency.
Britain's Financial Conduct Authority said on Monday it will ask lawmakers to report any problems they have opening or maintaining a bank account ahead of a formal investigation.
Canada's central bank has spent the last few years carrying out research into a digital loonie and what design features would be relevant to citizens with diverse payment needs and circumstances.
Toronto, on Wednesday, Aug. 9, at 11 a.m.,that’s when Ontario Auditor-General Bonnie Lysyk released her report on the greenbelt, surrounding Toronto. She found that the process for opening 7,400 acres of protected land to developers last year “was not transparent, fair, objective, or fully informed,” involved “certain prominent developers receiving preferential treatment” and “cannot be described as a standard or defensible process.”
Those energy revenues, however, have since tumbled, down 41% year-over-year for the first seven months of 2023. The latest data show Russia's current account is now at $25.2 billion, which reflects the heavy toll that war and Western sanctions have had on the economy.
In a statement, the Bank says: "In February 2023, the Bank of England and HM Treasury jointly issued a Consultation Paper setting out an assessment of the motivations and design choices for a potential digital pound. While no decision has been made, that paper signalled that the digital pound is likely to be needed in the future, so our work will now move onto a 'design phase'.
About a year ago, in the context of the federal Conservative leadership race, Mr. Trudeau was quick to imply that then-candidate Pierre Poilievre’s commitment to fire Governor Tiff Macklem of the Bank of Canada for failing to keep inflation in check was irresponsible and undermined the institution’s independence.
The Bank of Canada (BoC) is teetering on the edge of a potentially disastrous policy mistake. The inflation shock is now over. Inflation rates have declined dramatically during the past year, and there’s no solid evidence to suggest Canada’s economy is overheating. The central bank is now at a point at which it must adopt a monetary policy that’s independent of the U.S. Federal Reserve Board.
Yahoo Finance - Matthew Boesler, Craig Stirling (2023-08-04)
Rich-world peers from Italy to France and the UK are in the spotlight as higher interest rates impact debt levels exceeding 100% of annual output. Stakes are even higher for capital-hungry developing nations, where potentially ill-timed, negative revisions can push up borrowing costs for years.
Fitch downgraded the United States to AA+ from AAA, citing fiscal deterioration over the next three years as well as a growing general government debt burden, making it the second major rating agency after Standard & Poor's move in 2011 to strip the country of its triple-A rating.
The gap among lenders reached $17.1 billion, compared with $14.5 billion in May, according to data released by the central bank. The shortfall opened up as a result of a $1.7 billion drop in banks’ assets and an around $950 million increase in their liabilities.
Bonuses are for people who excel at their job, not for people who fail at their job. Finance Minister Chrystia Freeland, who is ultimately the federal government’s paymaster, needs to be reminded of that.
Alongside its counterparts in Turkey and Uzbekistan, the National Bank of Kazakhstan has emerged among the institutions that have contributed to a second straight quarter of decline in bullion purchases from central banks, whose buying accounted for nearly a quarter of global gold demand last year.
The resilience of the Canadian consumer has surprised economists and confounded central bankers. Fuelled by pent-up demand for in-person services as the COVID-19 pandemic has faded, and bolstered by high immigration and a strong labour market, consumer spending has remained remarkably sturdy through the first half of this year, despite rising prices and the most aggressive interest-rate hiking cycle in decades.
If Canada’s population boom continues at its current frantic pace, interest rates will face upward pressure and the massive influx of people will significantly worsen affordability for homebuyers and renters, a new report from TD Bank warns.
Bonds around the world fell as the Bank of Japan, the only major central bank not to have begun reversing ultra-easy monetary policy, surprised investors by loosening its control of market rates.
U.S. Federal Reserve Chair Jerome Powell was similarly noncommittal about whether more rate increases might be coming after the Fed on Wednesday raised its key rate for the 11th time in 17 months.
Mr. Trudeau, in explaining the massive shakeup, promised to place a greater emphasis on the economy and housing, for the “millions of Canadians who are struggling.”
The U.S. Federal Reserve raised its key interest rate for the 11th time in 17 months on Wednesday, leaving the door open to another increase as the central bank shows how serious it is about getting inflation back to two per cent.
"If policy is not restrictive enough to bring inflation to target on a reasonable timetable, there is a risk that rates will have to be increased by even more later. If policy is simply taking longer to work ... over-tightening risks making economic conditions more painful than necessary," the summary says.
The central bank now forecasts the consumer price inflation (CPI) index will return to two per cent in mid-2025. If this two-year prediction causes you concern that policymakers won’t be lowering rates for two years, fear not. It is quite amazing that they feel confident in making a prediction for two years out. Keep in mind that only 18 months ago, the overnight rate was still 0.25 per cent. As 2000 turned to 2001, the Bank of Canada’s rate was at six per cent. It is 5.25 per cent today. Back then, real gross domestic product (GDP) was growing by 4.7 per cent and employment was rising by 2.6 per cent. Higher energy prices were boosting exports. There was growth in employment and wages and, together with tax cuts, this grew consumer spending.
The regulator said the new guidance, which will take effect in the fiscal first quarter of 2025, is designed to “reflect an evolving risk environment and international developments.”
Farage, a skilled seeker of attention and generator of outrage, accused the bank of stomping on his freedom of speech, and some members of the Conservative government echoed his concerns.
Bloomberg - Ye Xie, and Matthew Boesler (2023-07-26)
In what was a brutal 2022 for investors, there was at least one sure-fire, money-making proposition for much of the year. All they had to do was buy stocks and bonds seconds before Federal Reserve Chair Jerome Powell began speaking at his post-FOMC press conference and dump them as he was wrapping up.
The Market Participants Survey results are based on questionnaire responses from about 30 financial market participants. You can view the latest quarterly data here.
When Chair Jerome Powell and other Federal Reserve officials gather this week for their latest decision on interest rates, they will do so on the cusp of achieving an elusive “soft landing” – the feat of curbing inflation without causing a deep recession.
European Central Bank President Christine Lagarde, perhaps the world’s most well-known female central banker since Janet Yellen led the Federal Reserve, spoke candidly earlier this year about being surrounded by men her entire career. Diversity would produce better results, she said.
It marked the first increase since the immediate aftermath of Russia's invasion early last year. Rates are now going up 100 basis points to 8.5% from 7.5%, as policymakers cited inflationary pressure from the ruble's recent slide and worker shortages.
China's major state-owned banks were seen selling dollars to buy yuan in the offshore spot market in early Asian trades on Thursday, two people with direct knowledge of the matter said.
Instead of expecting banks to adhere to current liquidity guidance on Aug. 1, OSFI said it expects to issue further guidance in October, and banks will be expected to align with any changes by January 2024.
British bank NatWest has apologised to former Brexit party leader Nigel Farage for the handling of the closure of his accounts with its private banking arm Coutts, according to two reporters citing copies of the letter on Twitter.
The Consumer Price Index rose 2.8 per cent in June from a year earlier, down from May’s 3.4-per-cent pace, Statistics Canada said Tuesday in a report. This was the lowest inflation rate since March, 2021, and it was below the 3-per-cent reading analysts had expected.
Yahoo Finance - Nicholas Comfort and Steven Arons (2023-07-19)
The ECB proposes to ask lenders to report data on their liquidity reserves on a weekly basis, breaking out funding by maturity and type of client, people familiar with the matter said, asking not to be identified as the deliberations are private.
At the conclusion of last week’s summit of premiers in Winnipeg, the leaders of our nation’s provinces talked a good game about the need for co-operation “to achieve Canada’s full economic potential.”
Following the global financial crisis of 2007-2008, OSFI saw a clear need for improvement in board effectiveness. A focus on the roles and responsibilities of boards of directors was an important first step towards strong corporate governance. To address the problem, OSFI revised its Corporate Governance Guideline in January 2013 (originally published in 2003). With this revision, OSFI elevated its expectations for corporate governance effectiveness to promote enhanced focus on sound prudential oversight by Boards of Directors in the Canadian federal financial system.
"We deal in a lot of aggregate numbers and averages, but we know that inflation and interest rates affect people very differently," Rogers said. "In particular, we know ... that the most vulnerable Canadians are the ones that are hurt most both by inflation and by higher interest rates."
The Bank of Canada is using its economic forecasts to try to prevent medium-term rates from falling too much and stoking more housing market speculation, according to a top economist.
The World Bank on Monday named 15 chief executive officers including financiers and asset managers to a group launched by the lender's president, Ajay Banga, aiming to marshal more private capital to combat climate change and boost investment in developing countries.
Politico - IZABELLA KAMINSKA AND DAN BLOOM (2023-07-11)
The rules recommend that any “individual who is entrusted with prominent public functions, other than as a middle-ranking or more junior official” be exposed to enhanced due diligence standards. That ensnares a wide catchment of political appointees, MPs and members of the House of Lords — along with their “family members” and “known close associates."
Most of the new Central Bank Digital Currencies (CBDCs) will emerge in the retail space, where eleven central banks could join peers in the Bahamas, the Eastern Caribbean, Jamaica and Nigeria which already run live digital retail currencies, the BIS found in its survey of 86 central banks conducted late 2022.
“Some further tightening of monetary policy may be required to ensure that inflation returns to target in a reasonable time-frame, but that will depend upon how the economy and inflation evolve,” Lowe said in a statement.
FT - Chris Giles, Valentina Romei and Alan Smith (2023-07-04)
Central banks have been raising interest rates at the fastest pace since the 1990s, but the most severe bout of inflation in a generation is yet to be tamed.
The central bank set its so-called fixing for the managed currency at a stronger-than-expected level on Friday, after the offshore yuan extended a seven-month low. The move came after reports that regulators have stepped up scrutiny of currency trading and cross-border capital flows, in a bid to stabilize the yuan.
Yahoo Finance - Ambereen Choudhury, Alexandre Rajbhandari and Daniel Flatley (2023-06-30)
Attention on the state-backed digital currency rose in Washington when Beijing piloted the tender at the 2022 Winter Olympics. Yet concerns that the currency could eventually supplant or bypass the US financial system, not China’s domestic use, are rankling some American officials. Republican lawmakers have been the most vocal.
"We made this decision in light of the distance we have come in tightening policy, the uncertain lags in monetary policy, and the potential headwinds from credit tightening," Powell said.
The May inflation numbers benefited from favourable comparisons with a year ago, otherwise known as base-year effects. Commodity prices surged after Russia’s invasion of Ukraine in early 2022, but those initial effects are no longer part of the year-over-year calculation of consumer price inflation.
“We will continue to vigorously promote high-level opening up and better protect the rights and interests of foreign investors per the law,” Xi said, according to the official Xinhua News Agency.
“The beat goes on with another strong run of Canadian data. This time it was retail sales, with April spending climbing 1.1 per cent. Most of that gain was due to higher prices, as volumes were up a modest 0.3 per cent, but it doesn’t change the fact that consumers appear to be more than willing to spend, spend, spend! …
Asked about what it is trying to ascertain from Shopify's records, the CRA said it uses information obtained through "unnamed persons requirements to identify taxpayers that may have been non-compliant and verifies that they have appropriately reported their income and have satisfied their filing obligations."
Vladimir Putin managed to avert an attack on Moscow with an eleventh-hour deal with his mutinous mercenary commander. But the uprising has pierced his aura of total political control over Russia unlike any other event in his nearly quarter century in power.
The rebellion ended on Saturday when Prigozhin ordered his troops back. The Kremlin said it had made a deal that the mercenary chief will move to Belarus and receive an amnesty, along with his soldiers. The mutiny marked the biggest challenge to President Vladimir Putin in more than 20 years of rule.
Vladimir Putin vowed to punish Yevgeny Prigozhin for “treason” over the warlord’s armed uprising. Instead, the former Kremlin caterer and his Wagner group appeared to escape any harsh consequences after launching the first coup attempt in Russia for three decades.
“Canadians must be confident that federally regulated financial institutions (FRFIs) have protections in place to counter threats to their integrity or security, including foreign interference.
These were 36 hours that provided a glimpse of the end of Russian President Vladimir Putin’s rule. Almost every action was improbable, at best a week ago – much was inconceivable, 17 months ago.
"You can't make a public statement declaring people are criminals and then, on the same day, at the end of the day, let your press secretary disagree with you and say 'No, those people haven't broken the criminal code.'"
Aljazeera - Mersiha Gadzo, Kate Mayberry and Umut Uras (2023-06-25)
“We agree that the Russian authorities are weak and that withdrawing Russian troops from Ukraine is the best choice for the Kremlin,” Reznikov wrote on Twitter.
The Kremlin even publicly guaranteed that Wagner Group founder Yevgeny Prigozhin had President Vladimir Putin’s “word” he could safely leave the country—after conveniently having criminal charges against him dropped.
Yahoo Finance - Erik Hertzberg and Sarina Yoo (2023-06-25)
Canada’s central bank will increase its key overnight rate to 5% in the third quarter, according to a monthly Bloomberg survey of 25 economists. That would be the highest level since 2001.
“My colleagues and I understand the hardship that high inflation is causing, and we remain strongly committed to bringing inflation back down to our two per cent goal,” Powell said Wednesday in prepared remarks to be delivered to the House Financial Services Committee. “We will continue to make our decisions meeting by meeting, based on the totality of incoming data and their implications for the outlook for economic activity and inflation, as well as the balance of risks.”
Headline rates of inflation across most of the world’s economies have fallen back sharply since the autumn but core rates — which exclude volatile categories such as energy and food — remain at or close to multi-decade highs.
That led to speculation that the break in the tightening campaign was an uneasy compromise between monetary doves who fear the Fed may raise rates too far and trigger a recession, and hawks who worry it won’t tighten credit enough to curb inflation that is running more than twice the central bank’s target.
Britain's public sector net debt surpassed 100% of gross domestic product in May as borrowing came in higher than expected, the Office for National Statistics said on Wednesday.
Reuters - David Milliken and Suban Abdulla (2023-06-21)
British finance minister Jeremy Hunt will hold a meeting with Britain's major banks on Friday to discuss how they can help homeowners hit by rising mortgage costs, after saying the government would not offer borrowers significant financial help.
On Wednesday, June 21, 2023, the Bank of Canada will publish a summary of the deliberations that took place ahead of its interest rate decision on June 7, 2023.
This paper studies the impact government expenditure has on inflation by examining an augmented Phillips curve implied from a structural New Keynesian model. Our estimation results, based on external instruments, show that the augmented Phillips curve has a flatter slope than the canonical specification and that government expenditure has a negative coefficient.
The banking sector is dominated by four banks making up around 85% of mortgage and other lending, and 90% of deposits, government data showed. Loans by smaller lenders have been rising but remain small in comparison.
Bloomberg - Lucy White and Aisha S Gani (2023-06-20)
The Bank of England is a step closer to launching its own digital currency after a yearlong project concluded the technology could support a “diverse range” of new ways to use money.
The bank’s global communications director, Bob Pickard, announced his resignation on Twitter Wednesday and recommended that Ottawa quit the bank because it was “dominated” by members of the Chinese Communist Party. He cited his Canadian citizenship when departing the Asian Infrastructure Investment Bank (AIIB).
Yahoo Finance - Catarina Saraiva and Steve Matthews (2023-06-15)
Policymakers on Wednesday left rates in a range of 5% to 5.25%, taking their first breather in a 15-month hiking campaign that included four jumbo-sized 75-basis-point increases last year.
Investment Executive - Christopher Rugaber (2023-06-15)
The Fed’s aggressive streak of rate hikes, which have made mortgages, auto loans, credit cards and business borrowing costlier, have been intended to slow spending and defeat the worst bout of inflation in four decades.
"We probably need a little more tightening, but it is not clear how much," said Blerina Uruci, chief U.S. economist in the fixed income division at T. Rowe Price Associates, noting that despite strength in recent employment and core inflation reports, a "nuanced" reading of the data showed both may be set to weaken.
Both the Canadian and Australian central banks surprised markets by raising rates last week, leading to a slump in global bonds and speculation that the Fed might follow suit. The Fed, however, has been vocal in signalling that it will hold this week, with markets placing odds of a hold at 75 per cent. That looked even more likely after May inflation checked in Tuesday at four per cent, the lowest level in two years.
Berlusconi was one of the most influential figures in Italian politics of the last three decades. Berlusconi made headlines in February 2023, when an audio recording emerged in which he praised the Russian leader, said he’d rekindled their friendship through gifts and letters, and blamed Ukrainian President Volodymyr Zelenskiy for Russia’s invasion.
At the same time, government hiring has outpaced private sector employment, keeping the pressure on labour markets at a time when the prospect of wage inflation remains a key concern for the central bank, it said.
Industry leaders say that, with their latest actions, U.S. regulators are more clearly signalling that they seek to ensure cryptocurrency has no room in the traditional financial system.
Yahoo Finance - Anthony Osae-Brown and Emele Onu (2023-06-12)
Governor Godwin Emefiele was suspended by Tinubu after the markets closed on Friday, and then detained by Nigeria’s state security service a day later for unexplained “investigative reasons.” Folashodun Shonubi, a deputy governor in charge of operations at the bank, took over in an acting capacity.
The increase brings the central bank's target for the overnight rate to 4.75 per cent, the highest level since May 2001, and restarts its tightening campaign as policymakers continues to try to tame inflation.
Finance Minister Chrystia Freeland tried to reassure Canadians that the economy is still headed for calmer times after the central bank unexpectedly resumed raising interest rates.
Investment Executive - Christopher Rugaber (2023-06-08)
The purpose of suspending its rate hikes is to give the Fed’s policymakers time to look around and assess how much higher borrowing rates are slowing inflation. Calling next week’s decision a “skip” is also a way for Chairman Jerome Powell to forge a consensus among an increasingly fractious committee of Fed policymakers.
Economists — many of whom expected high interest rates to send the economy into a recession by now — say the recent data suggests the central bank may have to hike interest rates again to get inflation back to the two per cent target.
Before First Republic, Erkan was at Goldman Sachs for nearly nine years, advising financial institutions. She was named a managing director in 2011. A graduate of Bogazici University in Turkey, she earned a Ph.D. in operations research and financial engineering from Princeton in 2006.
U.S. investment bank Morgan Stanley (MS.N) said on Monday that it expected the European Central Bank (ECB) to end its interest-rate hiking cycle in July at 3.75%.
he last-minute deal to raise the debt limit averted a US default, but risks making brinkmanship over federal borrowing a seasonal event as lawmakers wage fiscal war in Washington.
Prominent business economists say they are baffled by the government’s insistence on sticking to supersized immigration quotas at a time of widespread housing shortages. Stéfane Marion, chief economist at National Bank of Canada, and David Rosenberg, president of Rosenberg Research, have urged Ottawa to consider revising its targets to allow housing supply to catch up to demand.
G&M - LISA MASCARO, KEVIN FREKING, STEPHEN GROVES AND FARNOUSH AMIRI (2023-06-02)
Approval in the Senate on a bipartisan vote, 63-36, somewhat reflected the overwhelming House tally the day before, relying on centrists in both parties to pull the Biden-McCarthy package to passage – though Democrats led the tally in both chambers.
The Australian arm of the global consulting giant has faced intense scrutiny following revelations that a former senior partner obtained confidential tax policy information while advising the government. PwC then leaked the advice to colleagues who used it to advise global clients. The firm is now under pressure over how many employees were aware the information was being leaked.
The legislative action aims to impose a blanket restriction on the Federal Reserve, barring it from initiating, executing, or sanctioning any program built around examining the viability of CBDC issuance.
"On the global stage, the allure of CBDCs is fading," the bank said in a statement. "Implementation of a CBDC in Kenya may not be a compelling priority in the short to medium term."
The Canadian economy grew at an annualized rate of 3.1 per cent in the first quarter, outperforming expectations while adding pressure on the Bank of Canada to raise interest rates again, perhaps as early as next week.
US President Joe Biden and House Speaker Kevin McCarthy struck a deal on the federal debt ceiling over the weekend that, if approved by Congress, will avert a disastrous debt default.
Reuters - Sam Jabri-Pickett and Nia Williams (2023-05-30)
United Conservative Party (UCP) leader Danielle Smith's election victory in Canada's main oil-producing province Alberta on Monday is likely to herald further friction with Liberal Prime Minister Justin Trudeau, particularly over climate change.
G&M - LISA MASCARO, MARY CLARE JALONICK, FARNOUSH AMIRI AND MICHELLE L. PRICE (2023-05-29)
With days to spare before a potential first-ever government default, President Joe Biden and House Speaker Kevin McCarthy reached final agreement Sunday on a deal to raise the nation’s debt ceiling and worked to ensure enough support in Congress to pass the measure in the coming week.
“Nobody should expect that interest rates are going to go back down to the very low levels that we’ve seen over the last decade or so,” Mr. Macklem told reporters following the release of the central bank’s annual Financial System Review.
The European Central Bank is considering whether requirements tailored for individual lenders could help address the risks arising for those holding large amounts of uninsured deposits, a document showed.
Bloomberg - Anya Andrianova and Robert Fullem (2023-05-18)
The loonie is well-positioned to revisit its strongest level of the year as traders boost wagers that the Bank of Canada will resume interest rate hikes.
Canada’s politicians seem to be making the same mistakes politicians in Argentina and South Africa did. They behaved as if their countries’ wealth was endless, and look where they are now.
"It seems like this is a solution looking in vain for a problem to solve," said Karl Schamotta, chief market strategist at the financial payments company Corpay.
The French government is seeking to recover €2.5bn in back taxes from several banks, including some of the country’s largest lenders, over a scheme they are alleged to have used to avoid taxes linked to dividend payments. Gabriel Attal, the minister for the budget, gave the figure in a public Senate hearing earlier this month, but did not name the banks that had been issued with the demands. It is the first time that the French government has given a figure for the potential losses to public coffers from the so-called cum-cum trades, or transactions designed to seek tax advantages tied to the payment of dividends.
Bay Street bond dealers and investors are raising concerns about a proposed change to Canada’s housing finance system that would transform the $260-billion Canada Mortgage Bonds market and see the federal government financing a significant portion of the country’s mortgage lending out of its own borrowing.
Since 2021, Mr. Mendes has been on secondment to the Department of Finance, where he was serving as Assistant Deputy Minister. Mr. Mendes joined the Bank in 2004. He held increasingly senior positions before being appointed Deputy Managing Director of the Canadian Economic Analysis Department in 2013, Managing Director of Economic and Financial Research in 2016, then Managing Director of the Bank of Canada’s International Economic Analysis Department in 2017.
JPMorgan Chase & Co.’s Jamie Dimon took a jab at Donald Trump for encouraging Republican lawmakers to dig in over raising the debt limit even if it means default — an outcome his bank is prepping for by convening a weekly war room.
The U.S. Federal Reserve will probably need to raise interest rates further if inflation stays high, Fed Governor Michelle Bowman said on Friday, adding that key data so far this month has not convinced her that price pressures are receding.
Yellen's meeting with the board - which includes the chief executives of JP Morgan (JPM.N), Jamie Dimon, and of Citigroup's (C.N), Jane Fraser - was first reported by Politico.
Canadian wheat sales to China began within a decade of Mao Zedong’s revolutionary victory. For many years, the Canadian International Development Agency, which administered foreign aid programs, was a pillar of Ottawa’s engagement with Beijing.
The extraordinary expulsion – the first of a Chinese diplomat in decades – carries substantial consequences given the size of Canada’s economic and social ties with China. It is Canada’s second-largest trading partner and second-highest source of immigration.
In a statement after its latest policy meeting, the Fed removed a sentence from its previous statement that had said “some additional” rate hikes might be needed. It replaced it with language that said it will weigh a range of factors in “determining the extent” to which future hikes might be needed.
The labour deal that ended a historic strike by federal government employees is expected to serve as a catalyst for workers across Canada to push for higher wages in an inflationary environment.
“Inflation in Australia has passed its peak, but at 7% is still too high and it will be some time yet before it is back in the target range,” Lowe said in a statement.
Yahoo Finance - Tetsushi Kajimoto and Yoshifumi Takemoto (2023-05-02)
"The BOJ as central bank should tackle monetary policy operations, but I don't see the current financial situation impacting Japan's economy and financial sector as a whole.
Investment Executive - Christopher Rugaber (2023-05-02)
Seven of the Fed’s 18 policymakers, though, projected that rates would exceed 5.1%, while only one policymaker forecast a lower rate. That suggested that the Fed as a whole was leaning toward additional hikes.
Regulators had been working to find a way forward before U.S. stock markets opened Monday. San Francisco-based First Republic has struggled since the collapses of Silicon Valley Bank and Signature Bank in early March. They added to worries that the bank may not survive as an independent entity for much longer.
What the RBA and the Bank of Canada have gone through isn’t unique. Central banks around the world got fooled by the inflation surge that began in 2021, and have been scrambling to catch up over the past year. What was unique was the economic upheaval caused by the pandemic, which didn’t fit any past scenarios that were built into the predictive statistical models on which central banks depend.
Yahoo Finance - Ann Saphir and Hannah Lang (2023-04-28)
In back-to-back reports due on Friday, the Federal Reserve and the Federal Deposit Insurance Corporation (FDIC) are also expected to float a number of fixes that may lay the groundwork for tougher U.S. bank-sector regulation and supervision ahead - moves likely to elicit pushback from an industry eager to hang onto the regulatory reprieves it won several years ago.
BBC Chairman Richard Sharp resigned on Friday after an independent report found he had breached public appointment rules by not disclosing potential conflict of interest in his role in securing a $1 million loan for the then-prime minister, Boris Johnson.
Bank of Canada officials considered whether to raise interest rates again on April 12, according to a summary of the deliberations that led to the latest monetary policy decision – a sign that the central bank is leaning more toward rate hikes than cuts as it waits for inflation to fall.
In its initial releases, a digital euro would be accessible to euro area residents, merchants and governments. Non-resident euro area citizens might also have access, provided that they held an account with a euro area-based payment services provider.
Striking federal public servants will continue to receive their regular salaries until at least May 10, according to the government, though they will likely have their pay clawed back at a later date for the days they had spent on the picket line.
The Bank of Canada began disclosing climate-related risks to its operations and balance sheet this week – a move intended to inspire other financial institutions to raise their game on climate-related disclosure.
The Swissie has hit levels last seen in 1980 as investors wager that the Bank of Japan will keep its ultra-loose monetary policy unchanged Friday, a decision which may weigh on the Japanese currency. The Swiss National Bank removed negative rates last year and began its hiking cycle.
The revenue agency workers wanted a pay hike of 22.5% over three years, while the Treasury Board workers who oversee federal government administration were seeking a 13.5% pay rise over three years. The government offered both groups a 9% increase over three years.
China nudged banks this month to cut deposit interest rates further, seven people with knowledge of the matter said, in the latest effort to channel the country's vast savings pool into spending and more productive investments.
Overall bank credit did fall about 1.5% in the three weeks from Wednesday, March 15 to Wednesday April 5, and there were initial outflows of deposits from smaller banks to larger ones. But those flows quickly stabilized, and the Fed's recent Beige Book compendium of observations about the economy showed the lending impact seemingly regionalized, not evolving into an imminent national credit crash.
G&M - VANMALA SUBRAMANIAM, BILL CURRY, MARK RENDELL (2023-04-20)
A nationwide strike of more than 150,000 federal public servants has ground some critical services to a halt, even as both the union and the government remain at the bargaining table.
The Public Service Alliance of Canada says some 155,000 employees are prepared to walk off the job beginning Wednesday, including 35,000 workers from the Canada Revenue Agency.
“While these cryptoassets have yet to achieve mainstream adoption as a means of payment, associated financial activities have the potential to present risks to the financial system,” OSFI said in a letter accompanying the consultation.
Yahoo Finance - Zoe Schneeweiss and Harumi Ichikura (2023-04-17)
“At some point, it’s only natural that the step size is reduced — for example, the increase could be not 50 basis points, but 25 basis points,” he said, according to the Baltic country’s Leta news service.
Yahoo Finance - Howard Schneider and Balazs Koranyi (2023-04-17)
Major central banks may be deep into their drive to raise interest rates in hopes of killing inflation, but the endgame remains far from clear as price increases prove harder to slow than expected, and analysts caution that financial markets could still break along the way.
U.S. Treasury Secretary Janet Yellen said banks are likely to become more cautious and may tighten lending further in the wake of recent bank failures, possibly negating the need for further Federal Reserve interest rate hikes.
Fiat-referenced crypto-assets are the most prevalent type of stablecoin. They have gained in popularity within the growing crypto-assets market and have the potential to present risks to the Canadian financial system.
Inflation should fall quickly in the coming months, but getting it back to 2 per cent could be a long slog, Bank of Canada Governor Tiff Macklem said Thursday, suggesting that interest rates may need to remain elevated for some time.
The Bank of Canada held interest rates steady on Wednesday while pushing back against market expectations that it will start cutting rates later this year.
Powell, at the post-meeting press conference in March, said officials were stumped by the rapid run on SVB. And New York Fed President John Williams this week said he didn’t think there was a link between the Fed’s aggressive rate increases and stress in the banking sector.
Yahoo Finance - Dan Reichl and Silla Brush (2023-04-11)
BlackRock Inc. was hired by US regulators to help sell $114 billion in securities it amassed from failed lenders Signature Bank and Silicon Valley Bank, returning the asset-manager to its role as an adviser to the government in times of crisis.
There were no major surprises in the federal budget tabled on March 28, and the financial services industry received long-awaited clarity on several files. That said, some tax issues still linger.
Canada’s economy was supposed to be stalling by now. It’s still charging ahead, creating a challenge for the central bank as it prepares to hold its policy rate at 4.5% for a second straight decision.
The Bank of Canada is widely expected to keep interest rates on hold Wednesday as a string of aggressive hikes has yet to be fully reflected within the economy, one expert says.
"Since the full impact of monetary policy actions can take as much as 18 months to work its way through the economy, we will continue to look closely at available data to determine what, if any, additional actions we may need to take," Harker said in a speech at the Wharton Initiative on Financial Policy and Regulation.
“I think the warning signs were there ahead of time and people were talking about them,” Wilkins said, noting that rising interest rates that contributed to the crisis were no secret. “The Fed couldn’t have been any clearer that it was raising interest rates.”
"That will, I think, require some rethinking of the assumptions behind liquidity coverage ratio, the net stable funding ratio," Carney said, referring to the LCR and NSFR.
The roughly 4,000 AML-regulated entities within the scope of the levy will be organizations with U.K. revenue exceeding £10.2 million (about $10.6 million) per year, which will pay a fixed annual charge of either £10,000, £36,000 or £250,000 depending on the revenue bracket they fall in.
The term bank “bailout” has disappeared from the financial lexicon. It implied taxpayer-funded rescues equivalent to the GDP of a small country, rescuing the rich from the fallout of hopeless investments and protecting inept executives from lynchings at the hands of wronged depositors, clients and shareholders.
Yahoo Finance - David Hollerith and Jennifer Schonberger (2023-03-31)
One Republican lawmaker said the Fed already has the power to hold banks like Silicon Valley Bank accountable and it failed to do so. “Instead of giving more authority to regulators who were asleep at the wheel before these bank failures, we should hold them accountable for their inability to utilize their existing supervisory tools,” said Patrick McHenry, chair of the House Financial Services Committee.
Yellen on Wednesday said she was concerned by some of China's activities globally, particularly its lending to developing countries. She told U.S. lawmakers in a hearing that Washington was working hard to counter China's influence in international institutions and in lending to developing nations.
A Bank of Canada official said quantitative tightening will likely end in late 2024 or the first half of 2025, at which point the central bank would start buying assets again.
Canada may amend its deposit insurance law to increase protection limits if needed to calm a “market disruption,” according to Finance Minister Chrystia Freeland’s new budget.
Ottawa is planning to raise billions of dollars from banks and insurers through a change in tax rules on dividends that financial institutions receive from Canadian companies.
Banga, 63, recently completed a three-week world tour to meet government leaders, civil society groups and others in borrowing and donor countries as he campaigned for the bank's top post.
Reuters - Pete Schroeder, Hannah Lang (2023-03-29)
A top U.S. regulator told a Senate panel on Tuesday that Silicon Valley Bank did a "terrible" job of managing risk before its collapse, fending off criticism from lawmakers who blamed bank watchdogs for missing warning signs.
Deputy Governor Toni Gravelle talks about how the Bank of Canada supported markets during the COVID-19 pandemic and what we might do differently in the future. He also discusses recent turmoil in the banking system in the United States and overseas.
The U.S. Federal Reserve pressed ahead with its ninth consecutive interest rate hike, but signalled that it may be near the end of its monetary policy tightening campaign as it grapples with the most serious banking crisis since 2008.
To backstop the emergency sale of Credit Suisse Group AG to its Zurich rival UBS Group AG, the Swiss government pledged to make as much as 109 billion francs available — a hefty burden for the country of 8.7 million people.
For the past year, central banks including the Bank of Canada have fought to get inflation under control with single-minded determination. Over the past week, they’ve added a second task: stopping contagion from spreading through the global financial system after the collapse of Silicon Valley Bank and the emergency takeover of Credit Suisse.
The Bank of Canada, the Bank of England, the Bank of Japan, the European Central Bank, the Federal Reserve, and the Swiss National Bank are today announcing a coordinated action to enhance the provision of liquidity via the standing U.S. dollar liquidity swap line arrangements.
The ECB hiked rates by half a percentage point Thursday, underlining its determination to fight high inflation of 8.5 per cent. In a statement, the bank called the banking sector in the 20 countries using the euro currency "resilient," with strong finances.
Reuters - Balazs Koranyi, Pete Schroeder (2023-03-17)
"The Supervisory Board is meeting to exchange views and to provide members with an update on recent developments in the banking sector," an ECB spokesperson told Reuters.
China's central bank said on Friday it would cut the amount of cash that banks must hold as reserves for the first time this year to help keep liquidity ample and support a nascent economic recovery.
A group representing Canada’s venture capital sector is asking Prime Minister Justin Trudeau’s government to provide emergency financing to help startups affected by the collapse of Silicon Valley Bank.
Congress decided to provide relief from the Dodd-Frank legislation. Among other things, it ditched the $50 billion asset threshold for the most stringent oversight, pushing it up to $250 billion. Many large lenders, including Silicon Valley Bank, were thereby freed from the tightest regulatory scrutiny.
TrueNorth - Ellen Milligan and Philip Aldrick (2023-03-16)
Climate programs will slip lower on the central bank’s agenda so officials can focus more on the core operations such as financial stability, markets and a digital currency, according to a person with knowledge of the situation who asked not to be named. The BOE’s climate work currently focuses on building ESG disclosure guidelines, preparing insurers for risks from rising global temperatures and getting banks to carbon-test their balance
Market overseers, their hands already full with the biggest US bank failure in a decade, were forced over the weekend to contend with a drama playing out in a section of finance that has been trying their patience for months: crypto. That’s where USD Coin’s supposedly immutable bond with the dollar came asunder, when it was revealed about 8% of the reserves backing it were stuck at the collapsed lender.
Federal regulators will safeguard all deposits at Silicon Valley Bank, including money that isn’t normally covered by federal deposit insurance, the Treasury Department announced Sunday evening, a rare and sweeping move designed to prevent the tech-focused bank’s rapid collapse from infecting the rest of the U.S. financial system.
The federal government will not bail out the “investors and owners” of Silicon Valley Bank, Treasury Secretary Janet Yellen said Sunday on Face The Nation, saying the situation is different from the 2008 financial crisis, as the tech industry reels from the bank’s sudden collapse amid fears of broader financial industry contagion.
Canada’s banking regulator took control of Silicon Valley Bank’s domestic operations on Sunday, as governments, along with tech sector CEOs, spent the weekend scrambling to limit the impact of a leading global technology financer’s sudden collapse.
"The threat of a systemic disruption in the banking system is small, but the risk of stoking financial instability may well encourage the Fed to opt for a smaller rate increase at the upcoming meeting," Oxford Economics economist Bob Schwartz wrote on Friday after SVB was closed by regulators and as officials began examining how to respond to the largest bank failure since the 2007 to 2009 financial crisis.
President Joe Biden declared the US banking system “safe” and vowed stiffer bank regulation, after U.S. regulators were forced to step in with a series of emergency measures after Silicon Valley Bank and Signature Bank collapse, threatening to trigger a broader crisis.
G&M - BARRIE MCKENNA AND MARK RENDELL (2023-03-09)
The Bank of Canada held its benchmark interest rate steady at 4.5 per cent Wednesday, pausing its year-long campaign to increase borrowing costs while leaving the door open to further rate hikes if inflation doesn’t slow as quickly as expected.
The widely anticipated decision makes the Bank of Canada the first major central bank to halt monetary policy tightening and puts it on a different trajectory than the U.S. Federal Reserve, whose officials have said they expect to increase interest rates several more times.
The U.S. relies on debt for much of its spending — but what would spending cuts look like? WSJ explains how much the Treasury relies on debt, where it goes and what happens when the Treasury hits the debt ceiling.
Canadian inflation slowed more than expected to 5.9% in January and gross domestic product was flat in the fourth quarter, held back by weakness in the interest rate-sensitive parts of the economy, including housing investment as well as business spending on machinery and equipment.
The BoC is now in the process of trying to reduce some of the epic stimulus it injected into the system. It used QE for the first time in 2020, increasing the balance sheet by nearly 5x to $575.3 billion in March 2021. That was the peak holding, and as intended—it helped flood the market with excess capital. Shortly after, a generational high for inflation appeared. Mission accomplished, but it might have been a little too effective, requiring undoing.
The Federal Reserve could increase the size of its interest rate hikes and raise borrowing costs to higher levels than previously projected if evidence continues to point to a robust economy and persistently high inflation, Chair Jerome Powell told a Senate panel Tuesday.
The country’s anti-money laundering watchdog has fined Wealth One Bank of Canada – a bank established to cater to Chinese-Canadians – for failing to comply with a federal law designed to stop terrorist financing and the illegal concealment of the origins of funding.
The Bank of Canada is limited in how much its interest rate increases can lag behind those of the Federal Reserve, with the gap threatening to weaken its currency and fuel inflation, according to an economist at Bank of Nova Scotia.
Inflation is still going to be front and center, but he sees the BoC looking at short-term trends. The 3-month annualized growth rate is likely to be in focus, according to Reitzes. They’ll be sensitive to any signs of acceleration, or deceleration. Countries like the US are facing reemerging inflation pressures, and any rate hikes in excess of Canada can spark inflation via a weak loonie.
Quantitative easing enacted in the wake of the 2008 global financial crisis is now triggering hefty losses across Europe after commercial lenders deposited some of the money created with central banks — forcing them into ever-increasing interest payouts as rates are lifted to stem inflation.
Asked by the Committee, on a scale of one to 10, how likely it is that a digital bank central currency will be needed, Cunliffe said: “I'd say, I'm not sure it would be helpful to put a number on it… I'd just say it's more likely than not.”
“The cessation of CDOR is consistent with international restructuring of interest rate benchmarks,” said Stan Magidson, CSA Chair and Chair and CEO of the Alberta Securities Commission. “It is important that market participants make appropriate transition arrangements to prevent business and market disruptions following the cessation date.”
Bloomberg - Sofia Horta e Costa, Henry Ren and Tania Chen (2023-02-27)
After triggering a years-long exodus of foreign investors from Chinese markets, President Xi Jinping looked like he’d cracked the formula to revive his economy and lure back global funds.
The World Bank on Thursday will open a five-week period for nominations to succeed President David Malpass, days after he announced his early departure from the anti-poverty lender, and expects to select a new chief by early May.
As disconcerting as the US’s current debt situation is, the outlook is even worse. When the bi-partisan Congressional Budget Office updated its forecasts last week, it estimated that debt held by the public will climb to $46 trillion by 2033 from $31 trillion currently.
This puts the country one step closer to the dreaded “debt bomb“ scenario, which would make today’s battle over whether to raise the $31 trillion debt ceiling look quaint in comparison.
As Payments Canada continues to examine issues and a potential role within CBDC, it will be important to consider Payments Canada’s public policy objectives. These include the continued promotion of safety, soundness and efficiency of our payment systems while making the interests of end-users a priority.
The U.S. Treasury hit its $31.4 trillion borrowing limit last month. Unless congress raises or suspends that cap, the government could begin to default on bonds that underpin the global financial system and are considered some of the safest investments.
Asia’s central banks may need to raise interest rates further if core inflation does not show clear signs of returning to target, according to the International Monetary Fund.
“Results will turn negative for many banks already in 2022, because of the mismatch of interest rates on assets and liabilities,” Bank of Portugal Governor Mario Centeno said in an interview. “We finance ourselves now at higher interest rates, which do not match the return of bonds and all sorts of debt in the central bank’s balance sheet.”
But the decision to stay the course was suggestive, given Macklem’s appearance at the House finance committee and Beaudry’s speech at the University of Alberta represented the Bank of Canada’s first opportunities to tweak its message in the wake of the blowout jobs report on Feb. 10. Here’s what you need to know.
A Senate committee is calling for greater parliamentary oversight of the Bank of Canada as well as increased transparency, wading into a debate around central bank independence at a moment of heightened political interest in monetary policy.
“Unprecedented liquidity” in the market will buoy Canada’s economy as it moves through a modest recession, said the head of the country’s largest bank. Royal Bank of Canada chief executive Dave McKay, in an interview with BNN Bloomberg, said Canada is headed for a slowdown as higher interest rates designed to curb inflation slow consumer spending.
Large Russian banks' share of government debt purchases dropped to 59.5% in January, the central bank said on Thursday, down from 90.7% towards the end of 2022, as the finance ministry stopped issuing floating-rate bonds popular with lenders.
Reuters - Valerie Volcovici, Andrea Shalal and David Lawder (2023-02-16)
David Malpass, president of the World Bank, unexpectedly said he would resign in June on Wednesday, leaving open a job that oversees billions of dollars of funding and has a direct impact on poverty, climate change preparation, emergency aid and other issues in developing countries around the globe.
The governor's comments come after Statistics Canada's most recent labour force survey revealed the economy added 150,000 jobs last month as the unemployment rate hovers around record lows.
The Bank is fully committed to returning inflation to the 2% target. For three decades, this target has served Canadians well. And since it represents a sweet spot on the inflation spectrum, it remains the centrepiece of the Bank’s inflation-targeting framework. Keeping inflation stable and predictable at that low level is the best contribution monetary policy can make to the economic and financial well-being of Canadians.1
A UK government minister has suggested banks could sue the Bank of England over new rules that will force them to hold more capital for customer loans, potentially increasing borrowing costs for small businesses.
Bloomberg - Kate Davidson, Jennifer Jacobs and Josh Wingrove (2023-02-14)
President Joe Biden has decided to name Federal Reserve Vice Chair Lael Brainard as his top economic adviser, with an announcement coming as soon as Tuesday, people familiar with the matter said.
“Under the consultation proposals, a digital pound would be a claim directly on the BoE, which would issue and record them on a core ledger of all digital pounds. Private companies would enable end-users to access digital pounds via pass-through wallets that would send transfer and payment instructions to the core ledger,” the report said.
Bank of Canada Governor Tiff Macklem said on Tuesday that he does not expect to continue raising interest rates, reinforcing that the central bank has entered a new phase in its campaign against inflation as sharply higher borrowing costs bring economic growth to a standstill.
On Wednesday, the bank will release minutes of its January meeting at 1:30 p.m. ET (1830 GMT), in which the central bank raised the key interest rate by 25 basis points to 4.5% and said it would likely hold off on further increases for now.
Many Bay Street analysts expect the Bank of Canada will cut interest rates later this year as inflation cools and economic growth stalls, according to a survey published for the first time by the bank on Monday.
While central bankers continue to talk tough about clamping down on inflation, financial markets are questioning how resolute they will be if price pressures ease and economic growth stalls in the coming quarters as expected.
A White House economic adviser said negotiations over raising the US debt ceiling are an “absolute nonstarter” for President Joe Biden, though he’s ready to discuss spending with congressional Republicans.
The U.S. Federal Reserve increased its benchmark interest rate by a quarter percentage point on Wednesday and signalled that a “couple” more rate hikes are still needed to bring inflation under control.
The U.S. Federal Reserve Wednesday raised its key interest rate by a quarter-point, its eighth hike since March, while signaling that further rate hikes will be required despite signals inflation is easing. But the words spoken in a later press conference seemed to matter just as much, if not more, to markets - which rebounded from earlier losses.
Banque du Liban, the nation’s central bank, on Wednesday set the pound at 15,000 per dollar, devaluing the official rate of 1,500 by 90%, according to people familiar with the matter. It also replaced two separate rates offered on foreign-currency deposits — at 8,000 and 12,000 each — with the new level.
Central banks added a whopping 1,136 tonnes of gold worth some $70 billion to their stockpiles in 2022, by far the most of any year since 1967, the World Gold Council (WGC) said on Tuesday.
Investment Executive - Christopher Rugaber (2023-01-31)
When its latest meeting ends Wednesday, the 19-member policymaking committee is expected to raise its key short-term rate, which affects many business and consumer loans, by a quarter-point. In doing so, it would elevate the rate to a range of 4.5% to 4.75%, its highest level in 15 years. The Fed’s move would follow a half-point rate hike in December and four three-quarter point hikes before that.
On Wednesday, the Bank lifted its benchmark rate by a quarter point to 4.5 per cent and said it's looking to hold off on further hikes for the time being to assess the impact of higher rates on the economy. It's widely thought that interest rate moves take 12-18 months to fully filter through the economy.
Jean Boivin, the former Bank of Canada deputy governor, was on a video call organized by the Canadian Association of Business Economics a few hours after the central bank issued its conditional pause on interest rate increases this week.
The stage is set for a clash between traders betting on interest-rate cuts and Christine Lagarde, who’s ready — once again — to hammer home the need to stamp out inflation.
The new restrictions are expected to prevent the sale of “at least some” of these DUV machines, Bloomberg previously noted, which will further limit the ability of Chinese companies to produce advanced chips and set up production lines. ASML CEO Peter Wennink previously told CNBC that China accounted for around 15 percent of the company’s sales in 2022.
The Bank of Canada increased interest rates again on Wednesday but said that it expects to hold off on further rate hikes, making it the first major central bank to signal an end to monetary policy tightening.
“The minister of finance has recently communicated to me that the government intends to introduce legislative amendments that will allow the bank to retain earnings to offset losses,” Macklem said at a press conference in Ottawa. “It will allow, on a temporary basis, the Bank of Canada to retain earnings rather than return them to the government for the purposes of covering losses.”
Money-supply purists have long argued that the country's ever-growing stock of money was an inflation powder keg. It's an argument that lost credibility with policymakers in the record-long economic expansion before the pandemic when M2 rose by more than 80% but inflation never rose sustainably above the Fed's 2% target and spent much of that decade notably below it.
Two weeks from now, on February 8, we will publish for the first time a more detailed summary of Governing Council’s deliberations. This summary will provide more insight into our decision making, so I can be brief today. But let me say a few words about our economic outlook.
The Bank of Canada is so poor at documenting what goes on when its leaders sit down to discuss interest rates that it gave itself a failing grade among its peers. Monetary policy is made behind closed doors for obvious reasons. But in the spirit of transparency, most major central banks release minutes of their deliberations a few weeks after the decision is made. The Federal Reserve in the United States goes so far as to publish full meeting transcripts after five years. Canada’s central bank does nothing of the sort. The governor might share some words about what was discussed in the opening statement at the quarterly press conference that always follows the release of a revised outlook and an interest-rate decision. That covers four of eight scheduled policy announcements. The other four are followed a day later with a speech by the governor or one of his deputies that updates the central bank’s thinking on the economy. The detail of the policy discussion varies from speech to speech.
The Bank of Canada is widely expected to raise its trend-setting interest rate this week by a quarter of a percentage point, which would bring it to 4.5 per cent.
Yahoo Finance - Philip Aldrick, Tom Rees (2023-01-24)
The budget deficit stood at £27.4 billion ($34 billion), a record for the month and almost triple the £10.7 billion shortfall a year earlier, the Office for National Statistics said Tuesday. Economists had forecast a reading of £17.3 billion.
Stop. Look. Listen. Then proceed cautiously. That was the advice we were given as children for crossing the road, and it’s pertinent today for central bankers. After failing to stop consumer prices from accelerating, the risk now is that their pride is dented and they all overtighten to prove their inflation-fighting mettle — pushing us into a deeper recession. Having misread the the global economy for much of the past three years, they should consider pausing their rate increases to avoid compounding the felony.
The Federal Reserve and Bank of Canada can afford to pause interest-rate increases now because inflation pressures are easing rapidly, Bank of Montreal strategist Brent Joyce said.
“We see a broad weakening trend in the U.S. dollar unfolding this year as attention turns to policy tightening in other advanced economies, and the greenback unwinds some of its safe-haven currency bid to come into better alignment with trade fundamentals,” the report said.
The Bank of Canada is widely expected to deliver a final quarter-point interest rate increase on Wednesday before pausing its historic monetary policy tightening cycle.
Canadian markets have begun discussing rate cuts, and that’s a reason we might not see one this year. BMO Capital Markets wrote to investors over the weekend, outlining their expectations for a rate hike this week. Their forecast currently sees the Bank of Canada (BoC) hitting pause after the next hike, but they warn it might not be the top. Strong fundamentals, inflationary risks, and market expectations may fuel future hikes.
Bloomberg - Erik Wasson, Claire Ballentine and Suzanne Woolley (2023-01-22)
Treasury Secretary Janet Yellen has declared that the US has hit its federal debt limit, kicking off an intense political battle that puts the global financial system at risk.
The Bank of Japan this week crafted a new weapon to defend its yield cap and extend the lifespan of its yield control policy, without having to ramp up bond buying and dry up already thinning market liquidity.
Investment Executive - Christopher Rugaber (2023-01-19)
Mester, who has been president of the Cleveland Fed for eight years, didn’t say how large a rate hike she favored when the Fed’s next meeting ends on Feb. 1. Most economists expect the central bank to announce a smaller quarter-point hike. But Mester noted that the economy and the financial markets “were able to handle” the half-point hike that the Fed carried out in mid-December.
The OCC’s escalation framework includes four levels to compel banks to fix issues, starting with a non-public supervisory finding and intensifying to an enforcement action and eventually a growth restriction if the regulator finds that deficiencies have still not been addressed, Hsu said.
The former will be the story of 2023. When asked whether Canada could avoid a recession this year, only one person in a room of about 200 people at the Canadian Club’s annual outlook lunch in Toronto on Jan. 11 raised their hand. Yet investors are starting to wonder if the “soft landing” that central banks promised — without something less than full conviction — might actually be possible. Canadian employers created more than 100,000 jobs in December, and the unemployment rate dropped to five per cent, despite the most aggressive series of interest rate increases in the Bank of Canada’s history. Maybe Macklem knows what he’s doing. Stopping inflation might be the easier challenge. Humans are poor at both admitting mistakes and opening our minds to information that contradicts our world view. Charles Darwin used to make a point of taking notes on new information that contradicted his understanding of things because “such facts and thoughts were far more apt to escape from memory than favourable ones.” That’s what it took to come up with the theory of evolution. Central bankers must be equally rigorous in their post-mortems of what went wrong during the pandemic. Some of the criticism of their performances is overdone, but it’s obvious they don’t have as good a read on how the economy works as they thought they did.
Perrault made the statement during a discussion on inflation at the Canadian Club’s 46th outlook panel, held on Jan. 11 in Toronto. During the event, Perrault was asked if he believed Macklem’s repeated assertion that the central bank will tame price growth, which has remained outside of its target range of one to three per cent since April 2021.
The private sector crypto world might be imploding in flames, but around the world central banks are pushing on with their own digital asset projects. China has rolled out its central bank digital currency (CBDC) to several cities and it was available for use at the Winter Olympics.
A great majority - 21 traders and analysts - expected the MLF interest rate to stay unchanged at 2.75% this month, while the remaining four respondents expected a small rate cut
US Treasury secretary Janet Yellen has warned the US will hit its $31.4tn borrowing limit next week and could run the risk of a damaging debt default starting in early June, setting the stage for a high-stakes fiscal negotiation between the White House and Congress in the coming months. In a letter to congressional leaders on Friday, Yellen said the US would reach the debt ceiling set by Congress on January 19, and the Treasury would begin to take “extraordinary measures”, or “special management steps”, in order to honour its payments.
Finance Minister Chrystia Freeland has appointed three new members to the Bank of Canada’s board of directors, including the first Indigenous board member, bringing the central bank’s oversight group back up to full strength.
This time last year, Dimon was among the first voices on Wall Street to predict – correctly – that Federal Reserve officials would deliver as many as six or seven increases to their benchmark policy rate as prices rose at a historic pace. He said the three or four hikes investors were bracing for at the time were a low estimate.
Getting the design of a digital pound right is a bigger priority than a rapid launch, Britain's Financial Services Minister Andrew Griffith said on Tuesday.
Morneau argues that policymakers put scoring “political points” and public perception over sound fiscal policy with its federal aid programs in his upcoming book to be released Jan. 17. He describes growing tensions between him and Prime Minister Justin Trudeau, calling it one of the worst moments in his political life leading up to his departure in the summer of 2020 amid the WE Charity scandal.
Central banks aren’t giving up their inflation fight yet with the peak in interest rates still to come in most economies, but pauses will come at some point in 2023 — and perhaps even pivots.
When I got the job, one of the premises was that the risk environment is shifting, uncertainty is greater, volatility is greater. OSFI has to be ready for risks that we see on the horizon. So, climate risk and digitalization of financial services we do see. And then there are those risks over the horizon that we don’t see that are going to come up. At the time I took the job, it was the pandemic. But in February, we had the first war between sovereign states in Europe since the 1940s. I think it’s fair to say that was beyond the horizon when I took the job.
The Bank of Canada signalled earlier this month that it’s looking for an exit from its dizzying interest-rate-hiking cycle. Wednesday’s inflation report is not it.
The Bank of Japan shocked markets on Tuesday with a surprise tweak to its bond yield control that allows long-term interest rates to rise more, a move aimed at easing some of the costs of prolonged monetary stimulus.
The consumer price index was hovering around seven per cent in October, better than 8.1 per cent this summer, but still a long way from home. Getting there could require considerable pain.
Canadians have good reason to be upset with Tiff Macklem. Even Tiff Macklem says so.
At the start of the year, the Bank of Canada expected inflation would be close to 2 per cent by the end of 2022. It’s roughly 7 per cent.
“That’s a very big forecast error,” the central bank Governor said in a year-end interview with The Globe and Mail. “So, yes, we have some explaining to do.” Outside the Bank of Canada’s Ottawa headquarters, a snowstorm raged, a fitting metaphor for the kind of year the 61-year-old has had.
When the year began, the bank maintained a record-low policy interest rate of 0.25 per cent, and an explicit pledge to keep it there until the pandemic-battered Canadian economy had returned to full speed. It ends the year with a policy rate of 4.25 per cent, a 15-year high.
In between, Mr. Macklem and his colleagues have raised interest rates seven times, as they race to cool an overheated economy in an effort to tamp down the highest inflation rate in nearly 40 years.
The bank’s chief responsibility is maintaining low and stable inflation. But the inflation rate this year is not just far above where the central bank thought it would be, it’s in a whole different orbit from the bank’s long-standing target of 2 per cent.
As inflation approached and then exceeded 8 per cent over the spring and summer, Mr. Macklem and his team responded with bigger and bigger rate hikes – including an increase of a full percentage point in July, the biggest single step up in almost a quarter-century.
“There’s no question, it’s been intense,” Mr. Macklem said. “And it hasn’t just been intense for me. It’s been intense for everybody at the Bank of Canada. But let’s face it, it’s been intense for every Canadian. Everybody’s lives have been hugely disrupted.”
As first inflation and then rates soared, Canadians have felt the sting of both. Housing values have slumped; mortgage costs have surged. Grocery prices are up 11 per cent year over year. Many households are stretched to their financial limits. The central bank has itself acknowledged that rate increases could tip the economy into recession.
All of this made Mr. Macklem the leading economic newsmaker of the year – and, to hear some people talk, a leading public enemy. Critics at both ends of the political spectrum have questioned Mr. Macklem’s motives and competence. He has faced accusations of acting too slowly on inflation, of irresponsibly fuelling inflation through the bank’s expansion of the money supply, of making workers and households pay the price for his mistakes with a devastating succession of rate increases.
Conservative Party Leader Pierre Poilievre wants him fired. Lana Payne, the president of the largest private-sector union in the country, Unifor, accused him of declaring a class war. Desjardins economist Randall Bartlett lampooned him in a seasonal broadside, “How the Governor Stole Christmas.”
Mr. Macklem isn’t alone. Central bankers around the world have faced a reckoning over how they misread the rise of inflation. And their tough response – one of the most rapid and globally synchronized monetary-policy tightening episodes on record – has drawn howls from investors and politicians alike.
Mr. Macklem used his last speech of 2022 – an event last week in Vancouver – to deliver something of a mea culpa to Canadians. As in that speech, his conversation with The Globe a few days later candidly discussed the bank’s policy stumbles and the reasons behind them, and acknowledged the pain that the aggressive rate policy is inflicting as the bank tries to get the inflation genie back in the bottle – while looking toward what he believes are brighter days ahead.
“Canadians are being harmed by inflation, they’re feeling the pain. They’re also feeling the strain of rapid increases in interest rates. They’re asking a lot of tough questions; their elected representatives are asking a lot of tough questions. I understand that,” he said. “They should be asking tough questions. They should expect a lot from their central bank.”
The European Central Bank has banned its top officials from picking stocks and bonds or making short-term trades after a string of scandals at the Federal Reserve and backlash at home.
Canadian borrowers hoping that the U.S. central bank would signal that rate hikes were over were once again disappointed after the Federal Reserve chair Jerome Powell not only hiked rates by a half a point to a 15-year high but promised more increases in the new year.
Yahoo Finance - Craig Stirling, Jana Randow and Alexander Weber (2022-12-15)
With inflation in double digits and projected by officials to stay above their 2% goal for years to come, this week’s meeting both rounded off six months of drastic action and set the tone for further forceful monetary tightening.
The Bank of Canada could pause interest rate hikes as early as next month as it shifts to a more “data-dependent” approach to monetary policy, although the bank is still prepared to be “forceful” if necessary, deputy governor Sharon Kozicki said on Thursday.
“If these means additional funds, it suggests a highly proactive economic policy for 2023 - confirming the stance alluded to at the Politburo conference,” said Becky Liu, head of China macro strategy at Standard Chartered Bank. “Just the size and dates are making it very confusing — the maturing special bond is widely expected to be rolled over.”
Royal Bank of Canada, TD Canada Trust, Scotiabank, CIBC, Bank of Montreal, National Bank of Canada, Equitable Bank and Laurentian Bank of Canada all raised their prime rate by 50 basis points from 5.95 per cent to 6.45 per cent starting Thursday, Dec. 8.
The Bank of Canada increased interest rates for the seventh consecutive time on Wednesday, surprising markets with another oversized move while signaling that it may be nearing the end of its historic rate-hike cycle.
Donald Trump's real estate company was convicted on Tuesday of carrying out a 15-year-long criminal scheme to defraud tax authorities, adding to the legal woes facing the former U.S. president as he campaigns for the office again in 2024.
The Trump Organization - which operates hotels, golf courses, and other real estate around the world - was found guilty of paying personal expenses for top executives including former chief financial officer Allen Weisselberg, and issuing bonus checks to them as if they were independent contractors.
Central bankers must be feeling punch-drunk. For years, they strode like superheroes. We praised their genius, bestowed them with titles such as “maestro” – as one journalist labelled Alan Greenspan in a now-infamous encomium – and revelled in the New Jerusalem to which they’d delivered us: a Promised Land of low inflation and endless credit, where all we had to do to get rich was buy a house and watch it grow.
"It's something we're watching closely and we're engaged with our European counterparts, as well as our American counterparts, to make sure that we're working together," Trudeau told a news conference Monday.
Bank of Canada Governor Tiff Macklem is back in the hot seat after the central bank this week announced a $522-million third-quarter loss, the first such red ink in the institution’s nearly nine-decade history. More losses are expected in the coming months, creating an awkward situation for the federal government and raising inevitable questions about the bank’s independence.
Yahoo Finance - Siegfrid Alegado and Anup Roy (2022-12-02)
The shift to green energy may be “inflationary and even slightly stagflationary,” Bank of France Governor Francois Villeroy de Galhau said Friday, speaking virtually on a panel at a central bank conference in Bangkok. “I stress might, we don’t know yet.”
Brett House, fellow at Public Policy Forum, talks with Financial Post’s Larysa Harapyn about what the latest GDP reading on Canada’s economy means to the Bank of Canada which will decide on interest rates on Dec. 7.
The Bank of Canada has leeway to end its interest-rate hiking cycle in coming months even if the Federal Reserve keeps pushing borrowing costs higher next year, according to economists.
The Federal Reserve will push rates higher than previously expected and keep them there for an extended period, Chair Jerome Powell said Wednesday, in remarks likely intended to underscore the Fed’s single-minded focus on combating stubborn inflation.
Last April, when the Trudeau government tabled a budget amid some of the most difficult economic questions in decades, it said it was going to seek help finding answers.
Parliamentarians questioned Bank of Canada Governor Tiff Macklem about inflation and historic financial losses at the central bank on Wednesday, with top opposition politicians looking to frame the bank’s continuing dilemmas to their political advantage.
Yahoo Finance - STEVE AMBLER AND JEREMY KRONICK (2022-11-24)
The Bank of Canada’s ballooning balance sheet has received lots of attention lately. From $120 billion in early March 2020 it grew over the next 12 months to $575 billion and it still stands at $414 billion today, more than three times what it was. That happened because in response to the pandemic the Bank purchased Government of Canada bonds from commercial banks. It added the bonds to the asset side of its balance sheet and paid for them by boosting “settlement balances” — basically, the commercial banks’ bank accounts with it — on the liability side. Voilà, a ballooned balance sheet.
As the Bank of Canada squeezes the economy with higher interest rates, central-bank economists are betting that unemployment won’t spike as much as in previous downturns because of the elevated level of job vacancies across the country.
Yahoo Finance - Chikako Mogi and Takako Taniguchi (2022-11-18)
A 50 basis-point hike in December accompanied by hawkish rhetoric may end up pushing the yen past its three-decade low of 151.95 against the dollar. After that, the Japanese currency is more likely to strengthen, based on his views for the Fed, Thomas said.
This is less than the roughly 500 billion euros many analysts expected for the first voluntary repayment window of the ECB's Targeted Longer Term Refinancing Operation (TLTRO) since terms were changed last month.
What do Bill Hwang, the disgraced US investor, and Liz Truss, Britain’s shortest-serving prime minister, have in common? They were behind two of the multiple mini-crises in recent years that have gotten investors, bankers and regulators sweating about systemic risks for financial markets and investment funds. What people aren’t talking about enough, however, is the knock-on effect for banks.
The European Central Bank needs to keep raising interest rates but must not move too fast to avoid unnecessarily exacerbating a downturn, two policy-makers said on Monday, with one of them making the case for slowing the pace of policy tightening soon.
CBC - Peter Zimonjic, Catherine Cullen (2022-11-15)
"Rather than developing a tailored response intended to slow profits, stop profiteering, fix supply chain bottlenecks and help workers keep up, policy makers have taken to blaming workers instead — including the governor of the Bank of Canada, who has basically declared class war on working people in this country," said Unifor president Lana Payne.
Time and again, Europe’s leaders have pledged to address a looming threat to their union: excessive government debt. Yet time and again, events — first the pandemic, now a war-related energy shock — have undermined their plans, making the problem larger.
Some months after Jerome Powell became Federal Reserve Chair in early 2018, the former attorney and longtime investment banker began carrying around a new memoir by Paul Volcker: Keeping At It: The Quest for Sound Money and Good Government. “I actually thought I should buy 500 copies of his book and just hand them out at the Fed," Powell quipped at a conference in October 2019, just two months before Volcker passed away at 92. "I didn’t do that, but it’s a book I strongly recommend, and we can all hope to live up to some part of who he is."
It was a gracious, but arguably consequence-free tribute by Powell. After all, inflation was then running at just 2% and the towering (6’7”), cigar-puffing Volcker was most famous for taming the stubbornly high inflation that plagued the United States in the 1970s and early 1980s—and driving the economy into a painful double-dip recession while doing it. No need to emulate that.
But now Powell is facing the sharpest inflation spike in 40 years and some critics worry he may be hewing too closely to an outdated Volcker playbook, tightening too-fast and too long and spurring a deeper-than-needed recession at home and abroad. Repeatedly this year, Powell has alluded to the title of Volcker's memoir when discussing the duration of interest rate hikes, pledging the Fed must "keep at it" until inflation slows. He has insisted the stop-and-start Fed policy, led by Volcker predecessor Arthur Burns in the 1970s, was a mistake because it bred stagflation—that is, prolonged inflation in addition to stagnant growth—making it even more difficult to tame skyrocketing prices.
On Wednesday, Fed officials hiked interest rates by 75 basis points for a fourth-straight time in six months, pushing the key federal-funds rate (that’s the rate at which banks lend to each other, not to consumers or businesses) to a target range of 3.75% to 4%—the highest level since the Great Recession.
In their formal announcement, officials hinted they may slow the pace of hikes in December, saying they will take into account "the lags with which monetary policy affects economic activity" in determining future increases. But Powell, in the press conference that followed, didn’t back away from his hawkish stance, saying the latest economic data suggests the Fed may ultimately move rates to higher levels than it projected in September and that the risk is doing too little rate-hiking, not too much.
"We want to get this exactly right, but if we over-tighten, then we have the ability with our tools to support economic activity strongly," Powell said. "On the other hand, if you make a mistake in the other direction, and you let this [inflation] drag on a year or two, the risk is that it becomes entrenched in people's thinking." That’s what happened in the 1970s and early 1980s, as expectations of high inflation became entrenched and workers (many more of them unionized back then) demanded higher raises to cover future inflation.
For years now, central banks around the world have helped consumers and businesses weather economic storms. In crisis after crisis, they cut interest rates to help people get through. They printed money and bought bonds to prop up markets.
The Bank of Canada (BoC) surprised many with its rate hike earlier this month. Despite the market pricing in 75 basis points (bps), the central bank went with a 50 bps move. At 3.75%, the policy rate is now the highest in over a decade, and many assumed a smaller hike indicated we were close to peak. Not exactly.
John Vickers, a former chief economist who joined the central bank in 1998, will say in his Beesley lecture in London on Wednesday night that the central bank has fallen short and must be bolder to bring inflation back to the 2% target.
The federal government is on track to blow the spending target it set in April by $20 billion. That’s astonishing when we’re just a little more than halfway through the budget year. But here’s the most amazing part: Finance Minister Chrystia Freeland called her fiscal update “prudent.”
The idea that releasing greenhouse gases into the atmosphere should cost money — known as carbon pricing — sits at the center of the federal Liberals’ plan to limit climate change, and now they’re working on policies to ensure that it remains in place in Canada for years to come. Last month, Jonathan Wilkinson, minister of natural resources, told a crowd in downtown Toronto, that the federal Liberals plan to introduce a policy to ensure carbon pricing not only remains in place through at least 2030, but also ramps up during that time, from $50 per tonne to $170 per tonne.
In 1978, Chinese leader Deng Xiaoping announced that his country would make a break with the past. After decades of political purges, economic autarky, and suffocating social control under Mao Zedong, Deng began stabilizing Chinese politics, removing bans on private enterprise and foreign investment and giving individuals greater freedom in their daily lives. This switch, termed “reform and opening,” led to pragmatic policies that improved Beijing’s relations with the West and lifted hundreds of millions of Chinese people from poverty. Although China remained authoritarian, Deng shared power with other senior party leaders—unlike Mao. And when Deng left office, his successors continued down much the same path.
A newly announced Saskatchewan first act and the proposed Alberta sovereignty act aim to profoundly reshape this country by finally taking a stand against the federal government’s propensity to control areas of provincial jurisdiction. On Nov. 1, Saskatchewan Premier Scott Moe tabled Bill 88, which will assert provincial control over energy development, exploration and the production of electricity within the province. The legislation also seeks to unilaterally amend the Saskatchewan Act and the Canadian Constitution, to say that natural resource development is “critical to the future well-being and prosperity of Saskatchewan and its people.”
The central bank boosted its key rate by three-quarters of a percentage point, to three per cent, after consumer price inflation returned to a 40-year high in September. The aggressive move comes even as the bank predicted a two-year economic contraction through June 2024, which would be the longest recession since at least 1955, according to the Office for National Statistics.
Yahoo Finance - Randy Thanthong-Knight and Geoffrey Morgan (2022-11-04)
The buyback tax will be imposed on the net value of all types of share repurchases by public corporations in Canada. It is double the size of the 1% excise tax on repurchases that was signed into law by US President Joe Biden as part of the Inflation Reduction Act unveiled in August.
Back then, Powell intimated that an inversion would signal the need for the Fed to begin thinking of easing policy. The spread between three-month rates and the 18-month forward expectation of the three-month rate touched two basis points in recent days, and is well off the nearby highs of 130 basis points, and the best the chair could say was “it’s not inverted.”
The Bank of Canada is approaching the end of its rate hike campaign, but Canadians should expect borrowing costs to rise further before the pause, the central bank’s governor, Tiff Macklem, said Tuesday evening.Inflation remains far too high, Mr. Macklem told the Senate committee on banking, commerce and the economy. At the same time, the Canadian economy is expected to “stall” in the coming quarters, he said. This puts the central bank in a precarious spot.“If we don’t do enough, Canadians will continue to endure the hardship of high inflation. And they will come to expect persistently high inflation, which will require much higher interest rates and, potentially, a severe recession to control inflation,” Mr. Macklem told the Senate committee. He was there to explain the bank’s latest interest rate hike, announced last week.“If we do too much, we could slow the economy more than needed. And we know that has harmful consequences for people’s ability to service their debts, for their jobs and for their businesses.”The central bank raised its benchmark interest rate by another 50 basis points last Wednesday. (There are 100 basis points in a percentage point.) The move was smaller than financial markets had expected, but still brought the policy rate to 3.75 per cent – the highest level since early 2008.Mr. Macklem and his team have now raised rates six times since March, one of the fastest rate-hike cycles in decades. The crucial question is how much further the bank intends to go. Financial markets expect the bank to announce additional 25-basis-point increases in December and January, bringing the policy rate to a resting place of 4.25 per cent.Mr. Macklem shrugged off a question from Senator Pierrette Ringuette about an end point for interest rate hikes.“It’s pretty clear we think it needs to go up, but we do think we’re getting closer to the end,” he said. “That gives you a broad indication there. Yes, there’s a bit of space within that. As we get closer, as we get more information, we’ll make those decisions in real time.”The Bank of Canada isn’t alone in increasing borrowing costs. Central banks around the world are rapidly raising interest rates, in one of the most comprehensive global monetary policy tightening episodes on record. The U.S. Federal Reserve, the world’s largest and most important central bank, is expected to announce another 75-basis-point rate hike on Wednesday.Higher interest rates make it more expensive to borrow money. The goal of the increases is to reduce how much consumers want to buy, and how many workers businesses want to hire, which would in turn slow the pace of price and wage growth. In other words, the Bank of Canada is intentionally slowing down the economy in an effort to restore price stability.Rate hikes are already squeezing the Canadian housing market, with house prices down around 10 per cent from the peak earlier this year. Spending on other big-ticket items, such as furniture and appliances, is also trailing off. The outlook for the broader economy has darkened.The bank’s latest economic forecasts, published last week, show near-zero economic growth in the next three quarters. It now thinks there is a roughly 50-50 chance that Canada will experience several quarters of negative growth – a common definition of a recession. That will mean a rise in unemployment.“We are aware that this will tend to affect the most vulnerable workers the most. It will be a difficult transition for some. But there’s not really an alternative,” Mr. Macklem said. “We need a period of low growth … We’ve got to get the labour market into better balance.”The inflation picture is mixed. The rate of annual consumer price index inflation has trended down in recent months, thanks largely to falling gasoline prices. CPI inflation was 6.9 per cent in September, compared to a four-decade high of 8.1 per cent in June. The bank’s target is 2 per cent.At the same time, a growing number of goods and services are experiencing oversized price increases, making inflation harder to avoid. Two-thirds of the components of the consumer price index experienced annual price jumps of more than 5 per cent in September. Canadians are being hit particularly hard at the grocery store, where food prices rose 11.4 per cent year-over-year in September – the biggest jump since 1981.
That's the bank's way of saying that after having raised its rate five times in barely six months, it is getting closer to leaving the policy rate where it is while it assesses the impact of its increases so far.
“I think (rising debt costs and recession risks) go hand-in-hand really, to be honest,” Bartlett said. “It’s really just a function of an economic downturn — revenue growth slows, expense growth rises as a result of that. Then you layer on the gradual effects of higher inflation feeding into higher spending, plus higher interest rates which are leading to the economic downturn. So, it’s a bit of a perfect storm for a weaker fiscal forecast.”
The Bank of Canada is approaching the end of its rate hike campaign, but Canadians should expect borrowing costs to rise further before the pause, the central bank’s governor, Tiff Macklem, said Tuesday evening.
Normally the Federal Reserve makes a profit from its balance sheet, but with higher interest rates it is now in the red. WSJ explains how the Federal Reserve makes money, what it does with it, and what happens now.
That level of rate hike would bring the central bank’s policy rate, the federal funds rate, to a new range of 3.75% to 4% — its highest level since the end of 2007— from a current range between 3% and 3.25%.
Bloomberg - Vildana Hajric and Katherine Greifeld (2022-10-31)
Was it good or bad this week when Alphabet Inc. told investors that advertising demand that helped swell its top line 50% in two years is starting to soften? Depends on what you mean by bad, and rarely has an argument over definitions meant more for markets and the economy.
Bloomberg - Yoshiaki Nohara and Emi Urabe (2022-10-31)
Japan spent a record 6.3 trillion yen ($42.4 billion) in October to counter the yen’s sharp slide against the dollar, as it tried to limit speculative moves adding to pressure on the currency.
Canada’s oldest bank would like a little more clarity from the country’s central bank, going forward. BMO Economics wrote to investors this week, arguing the Bank of Canada (BoC) needs to be more transparent about their inflation data. After delivering a smaller-than-expected rate hike, the BoC presented a chart to justify its move. The data presented isn’t a regular measure used by markets, and BMO had trouble recreating it. In the future, BMO is requesting more regular releases of this non-traditional measure, since it has a significant impact on the market.
Investment Executive - Nojoud Al Mallees, Canadian Press, Mia Rabson (2022-10-31)
“We can’t support every single Canadian in the way we did with the emergency measures that we put in place at the height of the pandemic,” she said Oct. 19 in a speech to the Automotive Parts Manufacturers’ Association in Windsor, Ont.
It seemed inevitable. The fifty basis point rate hike today by the Bank of Canada might have surprised those who expected a larger increase. Still, it has a lot of people perplexed. Some are even angry.
The Bank acknowledged that while inflation is off its peak, it still remains too high. In the accompanying monetary policy report, the central bank is now expecting inflation to cool to three per cent in late 2023 before returning to the two per cent target by 2024.
Reuters - Balaz Koranyi, Francesco Canepa (2022-10-27)
The European Central Bank will raise interest rates again on Thursday and likely reel in a key subsidy to commercial banks, taking another big step in tightening policy to fight off a historic surge in inflation.
Today's rate hike would make it the sixth consecutive time the bank raises interest rates, making it the fastest monetary policy tightening in its history.
Today, we raised the policy interest rate by 50 basis points to 3.75%. This is the sixth consecutive increase since March. Quantitative tightening continues and is complementing increases in the policy rate. We also expect our policy rate will need to rise further. How much further will depend on how monetary policy is working to slow demand, how supply challenges are resolving and how inflation and inflation expectations are responding to this tightening cycle.
The New Democratic Party is criticizing the Bank of Canada’s rapid interest rate increases, further complicating the political environment for the central bank as it attempts to get inflation under control.
The Bank of Canada is expected to deliver another large interest rate increase this week, as central bank officials remain more concerned about doing too little to combat inflation than doing too much and causing a recession.
In a speech to the Brookings Institution on Oct. 11 that is still making waves around the world, called variously — though not by her — a "manifesto" or the "Freeland Doctrine," the deputy PM and finance minister laid out groundwork for a new global trade regime.
Public borrowing rose to 98% of economic output in September as rampant inflation increased interest payments on what the government owed, the Office for National Statistics said Friday. That’s higher than at any point since 1963, when Britain was still paying off debts accumulated during World War II.
This document provides an update to OSFI’s 2022-2023 ARO to include these environmental factors and OSFI’s Regulatory and Supervisory responses. The annex also notes modifications to policy releases.
“In an environment where we have left the world of low-for-long interest rates (and) low volatility, in an environment where borrowing costs are going to be higher — in my judgment, higher not just in the short-term, but in the medium-term — fiscal discipline is imperative,” Carney said during testimony at the Senate banking committee on Oct. 20. Carney said Canadian governments should take heed. He said targeted aid to households most affected by inflation was justifiable, but that otherwise it’s time to reduce deficits. With the benefit of hindsight, Carney also made the point that federal fiscal supports that were necessary through much of the pandemic went on longer than warranted.
“We agreed on a law to lift banking secrecy with some amendments where we widely expanded the number of groups that can ask to lift banking secrecy,” the head of parliament's finance and budget committee, Ibrahim Kanaan, said in a tweet. “Negotiations with the International Monetary Fund have not stopped, and we have been in constant communication in the past days and hours so there won't be flaws in the agreement that Lebanon aspires to.”
Many economists put the terminal rate, or the likely rate the Bank will max out at before cutting, at four or 4.25 per cent. The Bank of Canada’s Oct. 17 business outlook survey and its accompanying survey of consumer expectations found that both businesses and consumers are expecting short-term inflation to persist and a recession to be around the corner. Despite the gloom, many economists maintained their calls for a four-per-cent peak in interest rate hikes, arguing that the findings could have been much worse.
Deputy Prime Minister Chrystia Freeland says leading Western countries are setting an example by embracing “friend-shoring,” or shifting trade to friendly partners and liked-minded democracies: an approach that would curb some commercial relations with countries such as Russia and China.
Prime Minister Liz Truss apologised for threatening Britain's economic stability after she was forced to scrap her vast tax-cutting plans and embark on a programme of "eye-watering" public spending cuts instead.
France’s central bank head has warned that the recent turmoil in the UK’s bond markets illustrates the “vicious loop” governments face if they undermine efforts by rate-setters to curb soaring inflation.
The panel members include Mr. Stephen Butterfield, Mr. Michel St-Germain and Ms. Jill Wagman. They are all Fellows of the Canadian Institute of Actuaries (CIA) and Fellows of the Society of Actuaries (SOA). Each panel member has extensive experience in risk management, governance, funding, and design of pension plans.
The Governor of the Bank of Canada is dedicated to cooling off inflation. He's raised interest rates at a faster clip than other G7 countries, and there are signs it may be starting to work. But could the tactic also tip us into a recession? Paul Haavardsrud asks Tiff Macklem if there's still a chance to steer the Good Ship Economy in for a soft landing.
The Federal Reserve has just given the Bank of Canada an awful lot to think about.
On Wednesday, the U.S. central bank did a lot more than raise its policy interest rate by another three-quarters of a percentage point, to a range of 3 per cent to 3.25 per cent, a 14-year high. It raised the stakes in the global battle against inflation. It set the bar much higher for the peak of interest rates. It placed the world’s biggest economy on the edge of recession as it pursues this steeper rate path.
Now Canada’s central bank – facing different conditions than the Fed, but in pursuit of the same inflation-vanquishing goal – will have to decide what the strikingly altered picture painted by its U.S. counterpart means for Canadian monetary policy. In trying to strike the right balance in interest rates that will put inflation back in its cage without derailing the Canadian economy, the Bank of Canada now must consider how the Fed’s new stance changes that balance – and how much it can afford to diverge its own policy from that of its huge neighbour.
The members of the Federal Open Market Committee – the body that sets rates – projected that the benchmark rate will need to rise by at least another full percentage point by the end of this year, and will likely peak at somewhere between 4.5 per cent and 5 per cent next year. That’s nearly one percentage point higher than the Fed was talking about in the summer – a striking leap in expectations in the space of a couple of months.
The FOMC members also slashed their forecast for U.S. economic growth to a puny 0.2 per cent this year and 1.2 per cent next year, down from July’s projection of 1.7 per cent in both years. Such an anemic growth pace suggests a U.S. economy one sneeze away from full-on contraction. The committee sees unemployment rising next year to mildly above the estimated long-term normal level.
It all implies that the Fed is braced to put the U.S. economy into a stall, teetering on the precipice of recession, in order to tame inflation – a stance that Fed chair Jerome Powell confirmed Wednesday.
“No one knows whether this process will lead to a recession, or if so, how significant that recession would be,” Mr. Powell said in his post-announcement news conference.
“The chances of a soft landing are likely to diminish to the extent that [interest rate] policy needs to be more restrictive, or restrictive for longer. Nonetheless, we’re committed to getting inflation back down to 2 per cent.”
The Fed’s course correction follows an August inflation report that showed alarming increases in core measures of inflation – even after already substantial rate increases this year, as well as evidence that the U.S. economy has already slowed. The apparent stubbornness of inflation has caused the Fed to toughen its talk, and back it up with a considerably steeper path and higher peak for rates.
The Bank of Canada, which has also been raising its policy rate aggressively and had already raised its rate to 3.25 per cent earlier this month, is facing somewhat different conditions. Canada’s inflation rate is more than a full percentage point below that of the United States, and both Canada’s overall inflation rate and core measures fell more than expected last month. Canadian inflation was never as high as that of the U.S., its economic growth during the COVID-19 recovery has been generally less robust, and its central bank began tightening policy earlier than the Fed did.
Most forecasters have assumed that the Bank of Canada’s key rate would peak at 4 per cent at the most. Many believe that the bank is poised to slow the pace of rate increases as soon as its next policy decision in late October, and could put its rate hikes on hold by early next year.
The Fed’s aggressive tack will require some soul-searching in the corridors of the Bank of Canada. The conditions surrounding its rate-hiking cycle have changed.
Obviously, a stalling or even recessionary U.S. economy would weigh heavily on Canada’s own economic outlook, which still looked relatively healthy when the central bank updated its projections in July. If the Fed is determined to engineer a deeper slowdown, we can expect the Bank of Canada will have little choice but to become more pessimistic in its next forecast update in October.
Canada’s main opposition Conservatives are ratcheting up pressure on the nation’s central bank, although the party’s new leader has put aside his previous call for the governor’s dismissal.
In recent weeks, Prime Minister Justin Trudeau dismissed the suggestion that Canada could be a major supplier of liquefied natural gas to Germany, questioning the “business case.” Germany is wealthy, needs to replace Russian energy, and Canada has the third biggest reserves of natural gas on the planet.
Kishida is trying to ease the blow from a currency that has lost about 20% of its value this year against the dollar. The prime minister has ordered his cabinet to compile an economic package by the end of the month with an unspecified value, as higher commodity prices and a rapid weakening of the yen add to headwinds for small companies and consumers.
The Bank of Canada will start publishing summaries of its monetary policy meetings in an effort to improve transparency and shore up its credibility as it struggles to bring down high inflation.
The Bank of England said it would buy long-term government bonds over the next two weeks to combat a recent slide in British financial assets. The bank’s actions are focused on long-term government debt, where yields have soared in recent days, pushing up government borrowing costs
It’s a little insensitive, but necessary, to raise the issue of retirement saving at a time when many households are struggling to pay for groceries and gas.
Union leaders are calling on the Bank of Canada to halt further interest-rate hikes, arguing that the brunt of a potential recession will be borne by Canadian workers whose wages are already lagging behind inflation.
The Bank of England raised its key interest rate to 2.25% from 1.75% on Thursday and said it would continue to "respond forcefully, as necessary" to inflation, despite the economy entering recession.
The Bank of Canada is pushing back against the idea it will need to cause a recession to get prices under control, while assuring financial markets it will take “whatever actions are necessary” to bring inflation back to target.
The yuan has lost about 4% to the dollar since mid-August to weaken past the psychologically important 7 per dollar level. The local currency also looks set for the biggest annual loss since 1994, when China unified official and market exchange rates. The rapid yuan declines prompted the People's Bank of China (PBOC) to lower the amount of foreign exchange financial institutions must hold as reserves to rein in weakness. read more
Back in 2020, Conservative MP Pierre Poilievre accused the Bank of Canada of being an “ATM” for the Liberal government and its deficit spending, helping fuel inflation. Mr. Poilievre, now leader of his party, has also said if he’s elected prime minister, he’ll replace Tiff Macklem as governor of the central bank with someone who would reinstate the institution’s low-inflation mandate. And he’s promised to increase parliamentary oversight of the bank.
Australia’s central bank faces a potential overhaul of its interest rate-setting board that may result in more monetary policy experts and fewer business people, an independent review suggested.
The Bank of Canada (BoC) has been on an aggressive rate hike path. Earlier this month, they hiked interest rates 75 basis points (bps) higher, bringing the overnight rate to 3.25% — the highest since the Great Recession. RBC noted this is above the 2-3% range the BoC considers to be neutral. Central banks around the world are on a similarly aggressive path to try and curb inflation.
The Office of the Superintendent of Financial Institutions (OSFI) said Tuesday that it’s planning to eliminate a temporary revision to banks’ leverage ratio rules that was introduced in April 2020. The revision allowed banks to exclude certain “high quality liquid assets” from their leverage ratio calculations.
There are charts galore in the Clerk of the Privy Council’s annual report to the prime minister on the state of the federal civil service, and much discussion about mission and morale.
The ECB raised its key deposit rate - how much interest it pays on deposits - to 0.75% from zero, and lifted its main refinancing rate - how much banks have to pay when they borrow money from the ECB - to 1.25% from 0.5%.
Trevin Stratton, Americas economic leader with Deloitte, talks with Financial Post’s Larysa Harapyn about how the Bank of Canada rate seen hitting 4% or higher.
The Bank of Canada has delivered another oversized interest rate hike and signaled that its aggressive campaign to increase borrowing costs isn’t over despite signs that inflation has peaked and the Canadian economy is starting to lose steam.
Canada’s nearly C$300 billion ($228 billion) in Covid relief helped the nation navigate the pandemic’s acute phase, and now in its second act is poised to provide a soft landing for the economy.
Here’s the important part for today — BoC research shows it takes 18 to 24 months for policy to arrive to market. If the BoC wanted stable inflation, it was supposed to do it more than two years ago to get the ball rolling. Instead of coming down in a graceful landing, we’re slamming the shifters down, then up, then… you get it. Trying to force something is almost always worse than encouraging it, but at this point the BoC is stuck. This is a key point to understand the information below.
The Bank of Canada is expected to announce another oversized interest rate increase this week, pushing borrowing costs into “restrictive territory,” despite signs that inflation has peaked and the Canadian economy is slowing down.
Yahoo Finance - Julie Gordon and Fergal Smith (2022-09-06)
Some economists predict the Canadian central bank may signal a pause after its anticipated hike next week, especially after the release on Wednesday of GDP data that suggested the economy may be cooling faster than expected.
The federal government’s taxes and regulations are driving up costs for both farmers and the families who buy the food they produce. Food prices were up 10 per cent in July, the highest increase in more than 40 years.
A reader sent an email recently to share his opinion about what would have happened to Bank of Canada governor Tiff Macklem if he led a private lender, and not an arm’s-length government institution: fired! The ruthlessness of the private sector can be overstated. Mark Little remained CEO of Suncor Energy Inc. despite four workplace fatalities and numerous injuries over a two-year period; it took a fifth death in July to finally prompt Little’s resignation.
Even though that hike is consistent with plans outlined in this year’s budget, the Liberals’ 2021 election platform had originally envisioned a bigger 3-percentage-point increase to the corporate income tax rate (to 18 per cent on all earnings above $1-billion) for big banks and insurers.
When Diane Swonk first attended the Federal Reserve’s annual economic conference in Jackson Hole, Wyo., in the late 1990s, there was a happy hour for women who attended the event. It barely filled a single table.
The reaction was rather different from that to a recent set of public remarks from Powell earlier in the summer, which markets decided, somewhat imaginatively, to interpret as a possibility the Fed would pivot to worrying about recession risks, sending stocks highe
The Ottawa-based central bank said Monday it will replace deputy governor Tim Lane, who retires next month, with an external candidate who will work part-time on a two-year contract. “In a context of increasingly complex and interconnected Canadian and global economies and financial systems, it’s vital that we as an organization constantly adapt and evolve,” Macklem said in a news release. “This change provides an opportunity both to bring fresh and diverse perspectives into the Bank’s consensus-based policy decision-making framework and to ensure the Bank’s executive team has a balanced, streamlined and effective distribution of management responsibility.”
Bloomberg - Abhishek Vishnoi, Michael Wilson (2022-08-29)
The dog days of summer are firmly over as global investors absorb Federal Reserve Chair Jerome Powell’s stern message that interest rates are going higher for longer in a painful fight against inflation.
Investment Executive - Christopher Rugaber (2022-08-29)
Some on Wall Street expect the economy to fall into recession later this year or early next year, after which they expect the Fed to reverse itself and reduce rates.
Mervyn King, the former bank of England governor - and maybe more familiar to Powell than Maradona - famously linked that goal and monetary policy in a speech to illustrate how people react to what they think you are going to do rather than what you actually do.
The Canadian dollar CADUSD strengthened against the greenback on Tuesday, recovering from its lowest level in nearly six weeks, as oil prices rose and investors weighed U.S. economic data that could reduce expected tightening by the Federal Reserve.
San Francisco Federal Reserve president Mary Daly on Thursday said that raising interest rates by either 50 or 75 basis points in September would be a “reasonable” way to get short-term borrowing costs where they need to be to bring inflation down.
This advisory clarifies the interim regulatory capital and liquidity treatment of Deposit Taking Institutions’ (DTIs) and Insurers’ exposures to cryptoassets
Tiff Macklem spent much of the second half of 2021 trying to convince Canadians that rising inflation numbers were not all they were cracked up to be. He now finds himself making a similar argument in the opposite direction – as the dampener of enthusiasm for inflation’s downward turn.
The rate's increase to 1.75% was larger than expected as the bank takes aim at inflation that reached 6.8% in July. It noted that unemployment is very low, falling more than expected last month to 3.2%, and “activity in the Norwegian economy is high."
“Tuesday’s inflation number offers a bit of relief, but unfortunately, it will take some time before inflation is back to normal,” Macklem wrote in an opinion piece for the National Post on Aug. 16. “We know our job is not done yet — it won’t be done until inflation gets back to the two-per-cent target.”
“The dip in the headline rate was entirely accounted for by lower gasoline prices, which dropped to around $1.85/litre by the end of July after breaking the $2 per litre mark in June … Near-term headline inflation readings should continue to track gasoline prices lower. Indeed pump prices fell by another 6 per cent just over the first two weeks of August. Meantime, more cooling in the housing market, easing global supply chain constraints and lower commodity prices will all work to ease price pressure for a wider array of products.”
Yahoo Finance - Rae Wee and Vidya Ranganathan (2022-08-12)
The Japanese yen fell the most against a resurgent U.S. dollar on Friday, as a two-day rally in equities conceded to market expectations that the Fed will have to do a lot more to contain inflation.
Weakening the independence of regulators would undermine reforms to bolster Britain's finance industry, the head of the Bank of England said on Thursday, in a rebuff to proposals from the leading candidate to be the country's next prime minister.
Mexico and Peru’s central banks are expected Thursday to hike their key interest rates to the highest point in more than a decade, as they continue their record tightening cycles to try to wrestle persistent inflation back under control.
Overnight swap markets suggest about a 45 per cent chance that officials led by Governor Tiff Macklem will increase borrowing costs by three quarters of a percentage point at their Sept. 7 decision. A move of that magnitude would bring the policy rate to 3.25 per cent, the highest since April 2008.
With inflation higher than it has been in decades, there is no shortage of critics of the Bank of England. Still, the bulk of the blame seems largely unfounded.
The U.S. Department of Commerce is lowering tariffs against most Canadian softwood producers by half, but the long-running trade dispute lingers as Canada plans to appeal the decision to maintain punitive duty rates.
Japan's Government Pension Investment Fund (GPIF) reported on Friday an investment loss of 3.75 trillion yen ($28.13 billion) for April-June, the second consecutive quarter of negative returns, as economic slowdown fears hit global stock markets.
It’s hard not to think of Eeyore when reading the commentary that the Bank published Thursday, in conjunction with the announcement that it would be raising rates by 50 basis points, the biggest increase since 1995 (and the biggest ever since the BoE gained its independence under Tony Blair and Gordon Brown in 1997). This is what it had to say about future prospects:
Most investors and economists predict the BoE will increase its benchmark rate by half a percentage point to 1.75%, its highest level since late 2008 at the start of the global financial crisis, when it announces its decision at 1100 GMT.
The appointment comes only a few weeks since the left-leaning Silvina Batakis was tapped as economy minister after the more moderate Martín Guzmán abruptly quit, saying he wasn't getting political support in dealing with Argentina's economic woes.
Yes, Rogers’ responses to the CRTC’s queries were partly redacted, but the regulator kept its word and divulged enough details to give Canadians a basic understanding of how a coding error caused the company’s network to malfunction earlier this month.
Argentine Economy Minister Silvina Batakis “agreed on the importance of decisive program implementation,” IMF Managing Director Kristalina Georgieva tweeted Monday after meeting the new minister, who retweeted the comment.
That’s the view of former New Zealand central bank governor Graeme Wheeler and Bryce Wilkinson, a senior research fellow with the New Zealand Initiative think tank, who have co-authored paper released Tuesday in Wellington titled: “How Central Bank Mistakes After 2019 Led to Inflation.”
"The interest rate on the main refinancing operations and the interest rates on the marginal lending facility and the deposit facility will be increased to 0.50 per cent, 0.75 per cent and 0.00 per cent respectively, with effect from 27 July 2022," the bank said, referring to various rates the central bank charges banks for loans, and fees for keeping deposits at the central bank for short time period.
“Our credibility is being tested, and that was an important reason why we took an unusually large step last week to send a clear message to Canadians they can be assured that we’re going to control inflation,” Macklem told CTV News’s Evan Solomon on Wednesday following the June inflation figures.
It will be the first autumn national election for more than a century in Italy, where the second half of the year is normally taken up with getting the budget law through parliament.
If the U.S. Federal Reserve killed off forward guidance in June, the European Central Bank may have just hammered the final nail in the coffin of a tool officials had long used to provide monetary policy signals to financial markets.
Investment Executive - Nojoud Al Mallees (2022-07-21)
“A big difference now is sort of a strongly held notion that it’s mostly the job of the Bank of Canada to look after inflation control,” said Williamson. “In the 70s, that wasn’t true.”
Yahoo Finance - Volodymyr Verbyany and Daryna Krasnolutska (2022-07-20)
Ukrainian officials have for weeks explored debt restructuring as the country’s funding options dry up and the war destroys its industry. The junk-rated sovereign faces mammoth $1.4 billion foreign-debt redemption and interest payments in September, according to Finance Ministry data.
Days after Russian troops invaded Ukraine, the G7 and a host of allies in Europe and Asia declared a freeze on the assets of the Central Bank of Russia.
The decision will come hours before that of the European Central Bank, which will consider a bigger-than-expected 50 basis point rate increase to tame soaring inflation. While rising fuel and commodity costs have pushed Japan's inflation above its 2% target, the BOJ is in no rush to withdraw stimulus as slowing global growth cloud the outlook for an economy yet to fully recover from the COVID-19 pandemic's scars.
Canada’s 23 prime ministers have each left a legacy, and each of those legacies has an effect on all Canadians. One element critical to an analysis of each prime minister is whether he or she left the federal government more or less indebted than when first taking office.
The Bank of Canada is set to deliver a super-sized interest rate hike this week, as it accelerates efforts to withdraw stimulus from an overheated economy and rein in soaring inflation.
G&M - BARRIE MCKENNA AND MARK RENDELL (2022-07-13)
The Bank of Canada increased its benchmark interest rate by one percentage point on Wednesday, the most aggressive rate hike since 1998 and a larger move than investors and private-sector economists were expecting.
First, inflation is too high, and more people are getting more worried that high inflation is here to stay. We cannot let that happen. Restoring price stability—low, stable and predictable inflation—is paramount.
Late on june 13th, a curious article appeared in the Wall Street Journal. It said that the Federal Reserve was “likely to consider” raising interest rates by 0.75 percentage points at its meeting on June 15th.
The article was unusually silent about its sources. And it proved uncannily prescient. Two days later the Fed did indeed raise interest rates by that amount, its biggest increase in 28 years. Many investors believe the central bank had used the press to warn financial markets about what it would do in advance (albeit not very far in advance). That would make the Journal story an unconventional example of “forward guidance”.
A senior civilian Mountie sent a strongly worded letter to RCMP Commissioner Brenda Lucki last year, accusing her of bowing to political pressure and displaying “unprofessional and extremely belittling” behaviour to officers investigating the worst mass shooting in Canadian history.
Canada’s bank regulator plans to better protect the country’s financial system by limiting how much homeowners can borrow against the value of their homes.
The Ford government’s appointment of a Bay Street lawyer and Tory fundraiser to chair Ontario’s securities regulator has prompted two high-profile resignations, as well as concerns about her conduct and her dissenting views inher decisions regarding the laws that govern the capital markets.
Bloomberg - Giulia Morpurgo and Libby Cherry (2022-06-27)
For months, the country found paths around the penalties imposed after the Kremlin’s invasion of Ukraine. But at the end of the day on Sunday, the grace period on about $100 million of snared interest payments due May 27 expired, a deadline considered an event of default if missed.
In the cross-border context, the BIS Innovation Hub (BISIH) has been leading practical experiments to show how central bank digital currencies (CBDCs) could help deliver faster, cheaper and more transparent international payments.
Monetary regimes don’t fall often. Half a century ago, in 1971, Richard Nixon ended the Age of Gold by formally eliminating the dollar’s peg to the precious metal. Since then, the dollar and other currencies have rested on fiat—they’re worth something because governments say they are. You could call this the Age of Credibility. In place of gold, currency’s anchor is the trust in the central banks that issue them. Now credibility appears to be at an end. With central banks desperately ripping up their playbooks to try to rein in inflation that’s veered far beyond target, they’re admitting they’ve been wrong, and giving up on trying to steer the markets on their plans for the future.
“The technology and the technical issues are not that difficult, but once you have more than one jurisdiction involved, there are the policies and the regulations that of course, need to be reconciled,” said the BIS’s Hyun Song Shin. “What are some of the legal differences across jurisdictions that might mean that smooth flows might be impeded? So, there are more of these policy challenges that actually rear their heads in the wholesale application.”
Investment Executive - Christopher Rugaber (2022-06-22)
Inflation has proved higher and far more persistent than he or the Fed’s staff economists had foreseen. And at a policy meeting last week, Powell announced an unusual last-minute switch to a bigger interest rate hike than he had previously signaled — and then followed with a news conference that many economists described as muddled and inconsistent.
One of Canada’s largest commercial banks fired a broadside at Prime Minister Justin Trudeau’s government, warning that high levels of federal spending are hurting the fight against inflation.
“We think it was obvious inflation would be an issue over the last couple of years, and we believe it will continue to be an issue until we get the money supply under control,” Elass told advisors during the First Trust ETF Institute, held at the Royal York Hotel.
Finance Minister Chrystia Freeland and U.S. Treasury Secretary Janet Yellen have pledged to help central banks tackle inflation by cutting back on deficit spending, but Ms. Yellen was cool to reopening Keystone pipeline talks as a way to reduce oil prices.
Almost exactly a decade ago, Mario Draghi, then the president of the European Central Bank, promised to do “whatever it takes” to save the euro from destruction. At the time, Greece was on the verge of stumbling – or being frogmarched – out of the euro zone; Italy, the region’s third-largest economy, was so mired in debt that it, too, seemed a candidate for departure.
All flash and no (illicit) cash. That was the key takeaway from the Cullen Commission‘s final report looking at BC’s money laundering problem. Despite Canada talking a big game on anti-money laundering, its policies are ineffective. The Commission condemned federal anti-money laundering resources, and found Canada ignored the province’s calls for help. Austin Cullen, who led the Commission, concluded Federal resources aren’t reliable. The Province should therefore establish its own dedicated anti-money laundering enforcement team.
Freeland said her plan to address inflation and the affordability crisis has five parts: respecting the role of the Bank of Canada, investing in workers, managing the debt, creating good jobs and funding the suite of programs that make up the Affordability Plan.
Under the category of government relations, FP Canada stated it would like governments to “recognize financial planning as a profession and support its broad accessibility, through appropriate policy and regulatory frameworks” over the next three years.
G&M - ANN SAPHIR AND HOWARD SCHNEIDER (2022-06-15)
The Federal Reserve on Wednesday approved its largest interest rate increase in more than a quarter of a century to stem a surge in inflation that U.S. central bank officials acknowledged may be eroding public trust in their power, and being driven by events seen increasingly out of their hands.
Justin Trudeau’s finance minister will use a keynote speech to make the case that Canada’s government is ready to tackle affordability issues as consumer prices soar and borrowing costs rise sharply.
“Some think the Fed could deliver a surprise 75bp hike at the June meeting. Never say never in these circumstances but we think that remains very unlikely,” Evercore ISI analysts wrote Friday.
The central bank, which had been expected to pause after hiking to 1.5%, is now predicted to lift the benchmark cost of borrowing to 2% by this time next year, according to economists surveyed by Bloomberg last week.
Central banks have scarcely covered themselves in glory these past few years. Most have one goal and one goal only: to keep inflation low. In most countries, they have spectacularly failed at this job. In much of the developed world, inflation has reached many multi-year highs. But bar Turkey’s, I can’t think of a central bank whose record has been as lamentable as the European Central Bank. At least its Turkish counterpart has the excuse of being under the thumb of Recep Erdogan, the country’s president, whose contributions to economics are on a par with Vladimir Putin’s to international diplomacy.
Bill Morneau isn’t wrong about the Liberal government’s failure to deliver on a long-term economic growth plan. It’s just odd that he talks about it as if it’s someone else’s fault. An awful lot of what he has criticized happened on his watch.
The Federal Reserve, the European Central Bank and the Bank of England all preside over inflation rates that have surged to quadruple their 2% targets. One of their brethren is highly skeptical of their chances of success in calming price increases. It may turn out that they’ve been lucky rather than good in achieving price stability in recent years — and their luck has run out.
At the start of the hiking cycle, Chair Jerome Powell said the goal was “getting rates back up to more neutral levels as quickly as we practicably can.” In May, however, he walked back from the concept of neutral -- a level that neither slows nor speeds up growth -- cautioning that the discussion had a “sort of false precision.”
Former finance minister Bill Morneau delivered a pointed critique of the federal Liberals’ economic policies, along with a series of recommendations for kickstarting growth, in his first public speech since leaving political life two years ago.
"With ... inflation persisting well above target and expected to move higher in the near term, the [bank] continues to judge that interest rates will need to rise further," the central bank said in a statement.
For what it’s worth, Bay Street’s average forecast ahead of the release was for growth of about five per cent, so there will be some disappointment, or maybe relief, considering growth at that pace would continue to fuel worries that the central bank had lost its grip on inflation. The Bank of Canada has been struggling to get a read on prices, but it appears to have a better idea of what’s going on with GDP.
If worrying about an overheating economy wasn’t enough trouble, Bank of Canada Governor Tiff Macklem enters a crucial six-week period in his battle against inflation with an unexpected new problem: questions about his own credibility.
The Bank of Canada is expected to announce another oversized interest rate increase this week, part of its effort to push Canadian borrowing costs rapidly higher in the hope of slowing the pace of consumer price growth.
The guidelines, issued by the Office of the Superintendent of Financial Institutions (OSFI), call for annual climate-related disclosures on governance, strategy, risk management, metrics and targets, and greenhouse gas emissions, as well as a transition plan, for periods starting October 2023.
All participants at the Federal Reserve’s May 3-4 policy meeting backed a half-percentage-point rate increase to combat inflation they agreed had become a key threat to the economy’s performance and was at risk of racing higher without action by the U.S. central bank, minutes of the session showed on Wednesday.
Federal Reserve officials discussed the possibility of moving the US central bank to a “restrictive” policy stance that would better fight inflation through more aggressive interest rate increases, but worried that this could undermine the strong recovery in the jobs market.
The ruble was stronger for a fifth day against the dollar, trading up 2% even after Russia on Monday loosened capital controls by reducing the amount of foreign currency exporters are required to convert.
“It is clear to us all that we are living through a period of global volatility. We have COVID. We have the Russian invasion of Ukraine. We have China’s zero-COVID policy,” Freeland told reporters by teleconference from Munich, Germany after a G7 meeting.
UK pension schemes should not ignore climate change, a senior executive at The Pensions Regulator said on Monday, the first watchdog to weigh in after a top HSBC banker was suspended after playing down the financial risks of climate change.
Alberta Premier Jason Kenney announced his resignation as United Conservative Party leader Wednesday after receiving 51.4 per cent approval of his leadership from UCP members.
Born in 1972, Sun joined the People’s Bank of China in 1996 and has spent most of his career at the monetary policy department. He’s been at the forefront of the PBOC’s transformation into a modern central bank over the years and took part in many key milestones, including creating the interbank bond market, launching open market operations, establishing the yuan exchange rate forming mechanism, and most recently, revamping the interest rates.
The end of the carve-out could be the final straw in Russia’s debt saga after almost three months of war in Ukraine. It’s managed to make all its payments to creditors so far, weaving through the tangle of sanctions that closed off some avenues.
Federal Reserve Chairman Jerome Powell said Tuesday that the central bank will continue to raise short-term interest rates — which will likely slow economic activity — until there is “clear and convincing evidence” that inflation is coming down.
"We have asked banks to reassess their projections and capital trajectories in the light of the new macroeconomic picture, also considering adverse scenarios," Enria told Italian daily Repubblica.
On this episode of Editor's Edition, Yahoo Finance Canada's Alicja Siekierska and the Public Policy Forum's Sean Speer discuss the criticism being aimed at the Bank of Canada. Speer argues that the debate around the Bank’s decisions – as well as of other institutions – is justified in the post-pandemic recovery.
The Bank of Canada needs to keep raising interest rates to tackle runaway inflation, deputy governor Toni Gravelle said on Thursday – although how high rates go will depend on how the housing market responds to rising borrowing costs.
In his loud and frequent criticism of the Bank of Canada, Pierre Poilievre has been getting a lot of mileage out of how the central bank started the COVID-19 crisis thinking deflation, not inflation, would be the country’s big worry. The Conservative Party leadership candidate recently called the bank’s brain trust “financially illiterate” for getting the inflation call so badly wrong.
Speaking in Montreal, the deputy governor outlined how higher commodity prices, global supply chain issues, and the reopening of economies are pushing up inflation. Gravelle also said that the bank’s near-term forecasts for price gains are likely to be revised up, adding that “inflation pressures have been higher and more tenacious than we expected.”
Here’s what Poilievre, member of Parliament for Carleton, a riding on the outskirts of Ottawa, said he’d do with Macklem during a debate with the other leadership candidates in Edmonton on May 11: “I would replace him with a new governor who would reinstate our low-inflation mandate, protect the purchasing power of our dollar, and honour the working people who earned those dollars.”
Most of the nays were Republicans, though a few Democrats, including Robert Menendez and Elizabeth Warren, joined them. Menendez said Powell had not done enough to promote diversity in the Fed's leadership, while Warren said he had fallen short on bank regulation.
The Bank of Canada’s leaders dislike how they’ve been dragged into a partisan political contest. But they didn’t need Pierre Poilievre’s emergence as Canada’s answer to former United States congressman Ron Paul to know that a segment of the population has lost faith in them.
The Federal Reserve warned of deteriorating liquidity conditions across key financial markets amid rising risks from the war in Ukraine, monetary tightening and high inflation in a semi-annual report published Monday.
“We have to fix the supply problem,” Rogers said this week in an interview, her first since replacing Carolyn Wilkins as governor Tiff Macklem’s No. 2 in December. “We keep trying these different things to dampen demand and Canadians still want houses. We have immigration coming in, (and) we have a strong economy.”
Fed chair Jerome Powell said he expects the committee will consider increasing the policy rate by 50 basis points at each of its next two meetings, which would bring the Fed Funds rate back above prepandemic levels by the middle of the summer. At the same time, he seemed to rule out an increase of 75 basis points, saying that “is not something the committee is actively considering.”
What was striking about the speech this week from the Bank of Canada’s No. 2 official on the importance of central-bank independence wasn’t what she had to say. It was that the bank felt compelled to say it at all.
Turkey’s central bank has cut rates by 5 percentage points since September, to 14%, despite high inflation rates — before pausing them in January. The Turkish lira lost 44% of its value against the U.S. dollar last year.
The Bank of England looks poised to raise interest rates on Thursday for the fourth time since December, the fastest increase in borrowing costs in a quarter of a century as it tries to quell the danger from the leap in inflation.
In the space of a few short months, the prevailing narrative on U.S. inflation has veered from “It’s transitory” to “We have a problem.” This week, the Federal Reserve took another step toward acknowledging this, raising its policy rate by 50 basis points and leading investors to expect a faster pace of tightening from now on. That’s fine, you might say, the facts have changed – and to paraphrase John Maynard Keynes, when the facts change, you change your story. What’s interesting is that the story has changed more abruptly than the facts.
The Bank of Canada has ramped up efforts to defend its credibility amid soaring inflation and pointed criticism from Conservative politicians who say it has lost its independence from the government.
Recent research from a number of sources also cast doubt on Powell’s statement. As such, rather than buying into the Fed’s fantasy, inventors should exercise caution and shift away exposure from cyclical sectors into more defensive ones.
“(We’re coming) out of the deepest recession we’ve ever had,” Macklem said during testimony at the Senate banking committee late on April 27. “We got a lot of things right. We got some things wrong, and we are adjusting.”
The Bank of Canada is prepared to raise interest rates “forcefully if needed” to get inflation under control, Governor Tiff Macklem said Wednesday, doubling down on the message that Canadian households and businesses should brace for higher borrowing costs over the coming year.
The Liberals infused the infrastructure bank with $35 billion in federal financing to pull in two or three times that in private dollars, arguing it would stretch Ottawa's capacity to fund the building of more roads, bridges, energy, water and wastewater systems.
Poilievre, who lost his role as Finance critic ever since he decided to run for his party’s main job, was not there to butt heads against Bank of Canada Governor Tiff Macklem and Deputy Governor Carolyn Rogers during the Parliamentary Finance Committee on Monday.
The Bank’s primary focus is inflation. Consumer price index (CPI) inflation in Canada hit a three-decade high of 6.7% in March, well above what we projected in the January MPR. The war has driven up the prices of energy and other commodities, and it is further disrupting global supply chains. While most of the factors pushing up inflation come from beyond our borders, with the economy in excess demand, we are facing domestic price pressures too. About two-thirds of CPI components are growing above 3%, which means Canadians are feeling inflation across their household budgets, from gas to groceries to rent.
In the decade leading up to the pandemic, Canadian governments collectively accumulated approximately $525 billion in net debt — this despite a growing national economy in nine of the 10 years. COVID-19 then exacerbated the problem, as governments increased spending and amassed hundreds of billions in additional debt during 2020 and 2021. In its recent budget, the federal government alone projects its net debt will surpass $1.3 trillion this fiscal year (2022-23) and continue climbing until at least 2026-27.
FT - Victor Mallet, Leila Abboud and Sarah White (2022-04-25)
Emmanuel Macron has defeated his far-right rival Marine Le Pen to be re-elected president of France, vowing to tackle the country’s “doubts and divisions” during his second five-year term.
The Bank of Canada might consider hiking its benchmark interest rate by more than 50 basis points in a single move as it pushes borrowing costs higher to try to quell runaway inflation, Governor Tiff Macklem suggested on Thursday.
FP - William Robson and Alexandre Laurin (2022-04-22)
The 2022 federal budget highlights their success. Ottawa’s last pre-COVID projections, in its 2019 fall update, showed federal spending at $421 billion in fiscal year 2024-25. The 2022 budget’s projections have it at $479 billion a year (adding back $2 billion in pension obligations the government stopped including meanwhile). That’s $58 billion more, long after COVID-related measures are gone. The slogan we should have been hearing is “Build back bigger!”
Western countries should not appease Russia following its invasion of Ukraine even if there are difficult economic consequences, Bank of England Governor Andrew Bailey said on Thursday.
With every monthly release of Canada’s consumer price index, the gap between inflation and the Bank of Canada’s 2-per-cent target grows more cavernous – and the task to close it increasingly Herculean.
"Under the current conditions we have made the decision not to reveal the list of organisations connected to SPFS. Still, this list is available for users of the system," the Russian central bank told Reuters in an email. The institution used to publish a list of SPFS users on the website but recently stopped the practice, per Bloomberg.
Reuters - Howard Schneider and William Schomberg (2022-04-20)
Major central banks, already plotting interest rate hikes in a fight against inflation, are also preparing a common pullback from key financial markets in a first-ever round of global "quantitative tightening" expected to restrict credit and add stress to an already-slowing world economy.
Canada sanctioned Russian central bank Governor Elvira Nabiullina and 13 other “close associates of the Russian regime” in a fresh round of penalties related to the war in Ukraine.
European governments -- and companies -- are still grappling with what the decree means in operational terms. The person said the EU would work with national authorities to inform European companies that hold contracts of the assessment and provide guidance. The Dutch government has backed the EU analysis and said it won’t allow its companies to follow through with the Russian payment demand.
Had I been in charge of titling last week’s federal budget, it would have been called something like “Circling the toilet bowl of socialism.” We’re not quite in the bowl yet, but with this budget, we’re circling it. The Liberals instead called their budget “A Plan to Grow Our Economy and Make Life More Affordable,” a far less accurate description, for their policies are exactly the opposite of what they should be if they really want to grow the economy. As a matter of basic economics, to encourage economic growth, taxes must be low, simple, predictable, and broadly applied, in order to minimize distortions and provide certainty. The Liberals have broken all the rules of sensible taxation by making taxes higher, more distortionary, more arbitrary, and less certain.
For New Zealand, having the most hawkish central bank in Asia doesn't go far enough. Officials are intensifying their battle against inflation, even as confidence ebbs and the vital housing industry teeters. Is the country racing toward a recession?
The Bank of Canada is expected to announce its first oversized interest-rate hike in more than two decades this week after hawkish comments from the country’s top central bankers and growing signs that the economy is overheating.
Russia, hit by Western sanctions, has called on the BRICS group of emerging economies to extend the use of national currencies and integrate payment systems, the finance ministry said on Saturday.
Russia will halt bond auctions for the remainder of 2022 due to prohibitive borrowing costs, Finance Minister Anton Siluanov was quoted as saying by Russian newspaper Izvestia.
The federal government’s 2022 budget plan lays out more than $56-billion in new spending over six years, as part of a package Finance Minister Chrystia Freeland says will boost innovation and green technology.
Finance Minister Chrystia Freeland will table a budget on Thursday that promises $10-billion to make housing more affordable for Canadians, provides $8-billion in new defence spending, and aims to spur economic growth through green initiatives and a small-business tax cut.
After months of debate, the Federal Reserve has a plan to shrink its $9tn balance sheet as it tries to tighten monetary policy and tackle the highest inflation in decades.
It was the centrepiece of the federal Liberal government’s first innovation strategy: a $950-million “supercluster” program aimed at bringing together academia and business to collaborate in unprecedented ways, spinning out companies and creating jobs, economic growth and intellectual property.
BNS-T+0.77%increase
chief executive Brian Porter is calling on Ottawa to create a federal commission to draw a long-term economic road map, citing the need for new investments to build prosperity and counter mounting headwinds facing Canada’s economy.
Bill C-249, which saw its first reading in early February, would call on the Minister of Finance to consult with crypto industry innovators designated by provinces and territories to develop the framework. The bill also states that policy must focus on lowering barriers to entry in the crypto sector and protect industry innovators from crushing administrative burdens.
One week before the release of the federal government’s pivotal 2022 budget, Royal Bank of Canada chief executive Dave McKay was uneasy as he surveyed the daunting challenges ahead for Canada’s economy.
Bank of Canada governor Tiff Macklem is taking on a new role overseeing the global banking system as the chair of a group of central bankers that oversees the Basel Committee on Banking Supervision.
While economists expect the bank to gradually raise its rate another half-dozen times or so this year, there's a growing sense that the bank may need to start moving faster and more dramatically than anticipated to rein in inflation, which is already at its highest level in a generation.
Although a majority of Canadians are still doubtful inflation will be reined in, even a small pick-up in confidence is a welcome development for policymakers led by Governor Tiff Macklem. Bank of Canada officials have been warning they plan to act decisively with aggressive rate hikes to quell inflation, which has hit a three-decade high of 5.7%.
Dennis Mitchell, CEO and CIO at Starlight Capital, talks with Financial Post’s Larysa Harapyn about why the Bank of Canada is now ‘talking tough’ on inflation.
Yahoo Finance - Brian Platt, Robert Tuttle (2022-03-30)
Trudeau’s blueprint promises industry a tax credit to help pay for carbon-capture projects, details of which may come as soon as next week’s federal budget. It doesn’t, however, include a specific emissions cap on the fossil-fuel sector, which accounts for about a tenth of Canada’s total economic output.
Ukraine proposed adopting neutral status in exchange for security guarantees at talks with Russia in Turkey, meaning it would not join military alliances or host military bases, Ukrainian negotiators said on Tuesday.
Chris Chezepock had the nasty shock last year of finding out he was one of the thousands of taxpayers whose online accounts with the Canada Revenue Agency had been accessed by hackers looking to fraudulently obtain pandemic benefits.
Higher interest rates won’t guarantee rain on the Prairies this summer, and Macklem has no influence over international oil prices. Bay Street economist David Rosenberg’s argument that central banks are about to trigger a recession is a good one. Alas, if you’re Macklem, and your primary job is keeping year-over-year increases in the consumer price index at about two per cent, the most recent set of data leave you with only one choice: reel faster.
Supply chain issues exist, but not to the extent they’re making them out to be — especially before Ukraine. As we explained last week, this isn’t a regular amount of demand failing to be met. This is excess demand for goods, far more than normal supply levels satisfy. The increased demand is the intended consequence of loose monetary policy. The BoC actively tried to create demand that outran supply, to create more inflation.
The BoC estimates 1.75% is the low range of the neutral policy rate, which will be hit within months. A neutral policy rate is the point where monetary policy provides no influence. Below the neutral is expansionary, meaning stimulus for economic growth. Above the neutral rate is when monetary policy slows growth. The BoC estimates the neutral range to be between 1.75% and 2.75%, with more forecasts now predicting the higher end of the range will be needed.
Council on Foreign Relations - Zonhyuan Zoe Liu (2022-03-25)
An unintended consequence of Western punitive sanctions could be strengthening a Russia-China de-dollarization partnership. Joining such a partnership may also appeal to India. India has reportedly expressed interest in jointly exploring with Russia and China an alternative to SWIFT that would allow it to trade with countries under U.S. sanctions.
Yahoo Finance - Giulia Morpurgo, Laura Benitez and Lyubov Pronina (2022-03-18)
JPMorgan Chase & Co. has processed the funds and sent the money on to Citigroup Inc., the people said, spurring optimism that the bonds may still be settled in dollars. Bondholders, however, are still waiting for the $117 million payment. Four investors in Europe and three in Hong Kong had yet to receive funds as of 9 a.m. in London. S&P Global Ratings warned that the “technical difficulties” in getting the money to investors was increasing the risk of a default -- either this time around or in the future.
Investment Executive - Daniel Calabretta (2022-03-18)
In 2020, the BoC published a background note about its official position on a CBDC pertaining to public policy, design, technology and risk management issues the central bank was considering as it builds out its capacity to issue a digital currency if the need arises.
Revenue could surpass projections by as much as C$30 billion ($23.6 billion) over the next two years, though the governing Liberals are likely to book a more conservative amount given extreme levels of uncertainty and volatility as a result of Russia’s war in Ukraine.
The Fed’s next steps after today’s initial bump will be critical. With inflation clearly not “transitory,” the Fed may have to lean on some 0.50% hikes (that hasn’t happened since 2000) and a reduction in its $9 trillion balance sheet (that’s never been attempted at this scale) if price increases get even worse.
Bank of Russia expanded its gold reserves almost sixfold since the mid-2000s, creating the world’s fifth-biggest stockpile that’s valued at about $140 billion. It’s the type of asset it could sell to shore up the ruble, which has plunged as global economies isolate Russia following its invasion of Ukraine.
Saudi Arabia is in active talks with Beijing to price some of its oil sales to China in yuan, people familiar with the matter said, a move that would dent the U.S. dollar’s dominance of the global petroleum market and mark another shift by the world’s top crude exporter toward Asia.
So Russia has the money to pay but says it can’t because of the sanctions that have restricted banks and frozen much of its foreign currency reserves. Ratings agencies have downgraded Russia’s credit rating to below investment grade, or “junk.” Fitch rates Russia “C,” meaning in Fitch’s view “a sovereign default is imminent.”
The Federal Open Market Committee meets Tuesday and Wednesday, as it seeks to address the worst inflation in 40 years amid new risks to economic growth. Whatever the Fed decides on interest rates, it’s worth recalling how the central bank arrived at this unhappy moment.
The Order lays out a national policy for digital assets across six key priorities: consumer and investor protection; financial stability; illicit finance; US leadership in the global financial system and economic competitiveness; financial inclusion; and responsible innovation.
The day after the Bank of Canada raised its policy interest rate off its pandemic-emergency floor, the central bank’s Governor, Tiff Macklem, faced down worried questions about the strains rising borrowing costs were about to place on the backs of Canadians.
Bank of Canada Governor Tiff Macklem said the central bank could be aggressive in pushing up borrowing costs this year, as inflationary pressures broaden and commodity prices move sharply higher in response to Russia’s invasion of Ukraine.
The rate of change in financial markets has accelerated since Russia invaded Ukraine. With the market plumbing thus far proving sufficiently robust to accommodate wilder price swings accompanying risk transfers, even the relatively humdrum world of government debt is having to adapt. Specifically, the euro zone’s guardians of monetary stability, led by the European Central Bank, are having to intervene to reduce friction in their capital markets. It should be a wake-up call that liquidity can’t be taken for granted.
The Bank of Canada has raised its policy interest rate, pushing up borrowing costs for the first time since 2018 and kicking off a series of rate hikes despite heightened economic uncertainty caused by Russia’s invasion of Ukraine.
G&M - HOWARD SCHNEIDER AND LINDSAY DUNSMUIR (2022-03-02)
Federal Reserve Chair Jerome Powell said on Wednesday he would support a 25-basis-point interest rate hike at the U.S. central bank’s March 15-16 policy meeting and would be “prepared to move more aggressively” if inflation does not abate as fast as expected.
"In the current sanction situation foreign entrepreneurs are forced to be guided, not by economic factors, but to make decisions under political pressure," Prime Minister Mikhail Mishustin told a governmental meeting.
Russia's central bank reserves have effectively been frozen amid the decision, notes Reid. The country had about $630 billion of foreign reserves, a majority of which likely resides directly with G10 banks and central banks, says Reid.
Last week, as the world watched police restore public order in downtown Ottawa, the federal government’s hostility to resource development was dealt a huge financial blow that may in the end land-lock Canada’s immense oil reserves. Trans Mountain Corp. (TMC) announced that total costs for its pipeline expansion have ballooned 70 per cent to an eye-watering $21.4 billion, up from the latest estimate of $12.6 billion, and almost triple the initial estimate $7.4 billion. And, no surprise, the project’s projected completion was extended to the third quarter of 2023.
FP - Owen Walker in London and Max Seddon in Moscow (2022-02-25)
The sanctions already put in place over the past week took aim at smaller banks, a handful of oligarchs, the Nord Stream 2 gas pipeline and the trading of Russia’s sovereign debt. But experts say that to really squeeze Putin, the West needs to take aim at the country’s biggest banks.
Bloomberg - Garfield Clinton Reynolds (2022-02-25)
Russia still has about $300 billion of foreign currency held offshore -- enough to disrupt money markets if it’s frozen by sanctions or moved suddenly to avoid them.
The BoC is still forecast to hike interest rates next week, possibly with more reason. BMO reiterated they expect a full (25 bps) hike to the overnight rate at the March 2 meeting. At this time, the bank doesn’t see the crisis spilling over beyond Ukraine. If that occurs, it might need to be reviewed. The risk of uncertainty means the unlikely scenario of a 50 bps hike in Canada can be safely “put to bed.”
Housing The federal government has an important role to play, working with municipalities and provinces, in increasing supply, including a mix of rental supply. I think now is the time for new energy in the building of co-ops. We also need to do things in terms of the financialization of housing. We need to see housing as homes for Canadian families and not a financial asset. I want to be very clear that our government has absolutely no intention of altering the position on capital gains on the principal residence of Canadians. That is a very important part of how Canadian society works. Where we need to be thoughtful is in foreign money flowing into Canadian housing and turning that into a financial asset. That’s not what Canadian houses are meant to be for.
Kristen Rose, the OSC’s manager of public affairs, said the regulator is “aware” of posts earlier this week from the Twitter accounts of Kraken CEO Jesse Powell and Coinbase CEO Brian Armstrong, which criticized the invocation of the Emergencies Act and advocated for the importance of non-custodial crypto wallets, with Armstrong promoting his own company’s such product. Non-custodial wallets are controlled directly by an individual rather than by a third party such as a cryptocurrency-trading platform, making it more difficult for law enforcement to freeze or seize the funds they hold.
The CPI forecast is climbing more aggressively than the BoC expects. The central bank last forecast 4.2% annual growth for 2022, up from their previous forecast of 3.2% growth. Independent expectations are rising very quickly, as fewer people see monetary policy moving fast enough to cool inflation.
Deputy Prime Minister Chrystia Freeland said financial institutions have started freezing bank accounts belonging to protesters involved in blockades based on information from the RCMP, and predicted the number of accounts being targeted will rise in the coming days.
The Canadian Bankers Association confirmed the Royal Canadian Mounted Police has provided a list to the banks. The banks are still seeking clarity from law enforcement on how to handle the alleged protesters’ accounts, according to people familiar with the matter. But Finance Minister Chrystia Freeland said some accounts have already been frozen.
Canadian inflation didn’t hear your transitory call apparently — it’s widening to other categories. Statistics Canada (Stat Can) data shows the consumer price index (CPI) soared in January. The annual growth rate reached 5.1% for the month, advancing from 4.8% a month before. Canada’s inflation hasn’t grown this fast since September 1991, three decades ago. To make things worse, high inflation is being felt across categories, making it harder to slow down.
Deputy Governor Tim Lane discusses how the Bank of Canada approached decision making during the unprecedented upheaval brought on by the COVIDâ19 pandemic.
Investment Executive - Christopher Rugaber (2022-02-15)
James Bullard, president of the Federal Reserve Bank of St. Louis, on Monday reiterated his call for the Fed to take the aggressive step of raising its benchmark short-term rate by a full percentage point by July 1. Esther George, president of the Kansas City Fed, expressed support for a more “gradual” approach. And Mary Daly of the San Francisco Fed declined to commit herself to more than a modest rate hike next month.
Federal emergency act measures will expand the powers of Canada’s banks and financial intelligence agency to monitor and stem the flow of funds to protesters who have blocked downtown Ottawa and key corridors, as the federal government escalates its efforts to end the disruptions.
The way these battles conventionally work is this: a country tries to weaken its currency, to give it an advantage in global trade. It’s what President Donald Trump threatened to do with China, which he accused of intentionally devaluing the yuan.
But soaring inflation has changed priorities, since a stronger currency tends to help contain inflation by making imported goods cheaper. Strategists at TD Securities discussed the issue in a Wednesday note titled “Currency Wars in Reverse Got Markets in a Tizzy,” arguing that policy-makers now prefer strength because of the “inflationary impulse that has gripped markets over the past few quarters,” they wrote.
For 36 years, Visa has paid hundreds of millions of dollars to be an Olympic sponsor, ensuring its branding is all over stadiums and athletes, and that no one attending or watching the Games even thinks of Mastercard.
While U.S. equities saw positive returns during previous periods of rate increases, the key risk this time round is that the Federal Reserve will be “tightening into an overvalued market,” the strategists led by Savita Subramanian wrote in a note.
“The Fed is no longer on the dovish end of the spectrum, but it is not very hawkish relative to its G10 counterparts either,” wrote BofA Securities’ economics team over the weekend.
Two years after the pandemic sent the global economy into a deep but short recession, central bankers are withdrawing their emergency support -- and they’re moving faster than they or most investors had foreseen.
CBC - John Paul Tasker, Nick Boisvert (2022-02-03)
Candice Bergen was voted interim leader of the Conservatives on Wednesday evening after a majority of party MPs voted to remove Erin O'Toole as leader earlier in the day.
Macklem, speaking to the Senate banking committee, reiterated that interest rates would have to start going up this year to tackle inflation, which is currently 4.8 per cent, more than double the central bank’s 2 per cent target.
Britain must ditch plans to make regulators "cheerleaders" for global finance and instead focus on promoting financial inclusion at home, consumer campaign groups said on Friday.
The Bank of Canada’s maiden voyage into quantitative easing is coming to an end. Now we’re about to find out what the return trip – quantitative tightening – looks like.
The Governor of the Bank of Canada spent the best part of two years promising to keep interest rates as low as they could go, even in the face of surging inflation. This week, he blinked, declaring an end to the emergency phase of monetary policy, and putting Canadians on notice that borrowing costs are going up, and soon.
In 2016, the Bank of England took a stab at estimating the interest-rate equivalent of its bond-buying program: The thinking then was that 60 billion pounds ($80 billion) of asset purchases were comparable to a Bank Rate cut of about 50 basis points.
First, the obvious: The bank came right out and said that it plans to raise rates very soon – and that Wednesday’s announcement was, basically, clearing the tracks in preparation. This isn’t something central banks typically do. In this case, Bank of Canada Governor Tiff Macklem underlined the point in his post-announcement news conference. He wanted to make sure no one missed it. The bluntness had a certain “don’t say we didn’t warn you” feel to it.
Josh Nye, Senior Economist with RBC, talks with Financial Post’s Larysa Harapyn about the Bank of Canada’s decision to hold on interest rates, but signaled increases are coming.
Bloomberg - Erik Hertzberg and Theophilos Argitis (2022-01-27)
His own analysts presented him with evidence the economy is on the cusp of overheating and made a clear-cut economic case to hike immediately. But Macklem had told Canadians and investors they’d get a heads up before increasing rates. A move Wednesday could have been seen as a betrayal of that promise.
Instead of raising rates to cool inflation, Canada’s central bank raised its inflation forecast. The BoC CPI estimate reached 4.2% for 2022, which is a notable jump from the 3.4% previously expected. It’s also more than double the target rate of 2% they should have been working towards. The central bank recently found out most businesses no longer believe the BoC can control the monetary supply. This presents a significant concern when attracting investment to Canada.
Bloomberg - Jen Skerritt, Kim Chipman, and Allison Smith (2022-01-26)
Alberta Premier Jason Kenney said he’s working with U.S. governors to lobby President Joe Biden and Canadian Prime Minister Justin Trudeau for an end to trucker vaccine mandates that are disrupting shipments across the border.
The Bank of Canada today held its target for the overnight rate at the effective lower bound of ¼ %, with the Bank Rate at ½ % and the deposit rate at ¼ %. With overall economic slack now absorbed, the Bank has removed its exceptional forward guidance on its policy interest rate. The Bank is continuing its reinvestment phase, keeping its overall holdings of Government of Canada bonds roughly constant.
If you’ve been in the market for a new refrigerator in recent weeks, you’re likely still suffering from sticker shock. Fridge prices were up almost 14 per cent in December, as Canada’s overall inflation rate hit a 30-year high of 4.8 per cent. Everything is suddenly costing more, from that fridge and the groceries you put in it (up 5.7 per cent) to a new car (7.2 per cent more) and the gas (33 per cent) it likely runs on. From home insurance (9.3 per cent) to shelter costs (5.4 per cent), Canadians are forking out more and more of their income just to cover the basics.
Thedéen said that European regulators should consider banning a mining method known as “proof of work” and instead nudge the industry towards the less energy-intensive “proof of stake” model to cut down on the sector’s vast power usage.
Bloomberg - Theophilos Argitis and Erik Hertzberg (2022-01-24)
As early as next week, the Bank of Canada will start a campaign of tighter monetary policy that will test the country’s debt-laden consumers and reveal whether its robust economic recovery has staying power.
The head of the Bank for International Settlements, Agustin Carstens, recently set out a dark vision for our financial future, quoting Goethe’s “Faust” and claiming that the “soul” of money was at stake.
Bloomberg - Alexander Weber and William Horobin (2022-01-20)
“We’re all in very different situations,” Lagarde told the France Inter radio station Thursday in an interview. Inflation is “clearly weaker” in the euro area, while the region’s economic recovery is also not as advanced as in the U.S., she said.
FT - Guy Chazan, Roman Olearchyk, James Politi (2022-01-20)
Ukraine’s president Volodymyr Zelensky has hit back at Joe Biden’s suggestion that a “minor incursion” by Russian forces into Ukraine might not prompt the severe response the west has threatened — a remark that has alarmed allies of the US.
After months of anticipation, the Fed on Thursday released a lengthy discussion paper that will serve as the basis of what is expected to be a heated and consequential debate at the heart of the central bank in the coming months — though it made clear it did not “favour any policy outcome” at this point.
A subsidiary question is: Does the government of a Confederation have the right, the legislative competence to declare the central industry of one of the provinces within that Confederation outmoded? And on that premise make it a national policy to destroy the economic well-being of that province?
In 2017, Joe Clark made an appearance in Atlanta alongside former U.S. President Jimmy Carter. It was a fitting meeting, as both men were cursed to spend the majority of their lives recovering from a brief and ultimately unsuccessful flirtation with absolute power. It’s now been 43 years since Clark’s nine-month stay in government — easily granting Clark Canadian history’s longest tenure as an ex-prime minister.
Canada’s central bank has been going Brrr, and it’s not because of the frigid winters in Ottawa. Bank of Canada (BoC) data shows that the money supply is still expanding rapidly in October. The M2++ money supply hit peak annual growth last year, reaching the highest level since the 1980s. The latest numbers show over 1 in 5 Canadian dollars today, didn’t exist prior to 2020. Traditionally the expansion of the money supply precedes inflation. That explains a lot.
Economists at TD Securities and Laurentian Bank said Monday the Bank of Canada will start a hiking cycle at its policy decision on Jan. 26. Bank of Montreal brought forward its call on the first increase to March from April, while Bank of Nova Scotia said the central bank “cannot afford” to wait any longer.
Canada’s central bank has been tight-lipped about its next moves. The Bank of Canada last told the public that April would be the earliest they’ll be raising rates. That was back when they said inflation was transitory though. Since then, the US has dismissed the transitory narrative and Canada’s central bank has been quiet.
Canada’s long-term economic growth and the stability of its financial system could be put at risk if the country delays implementing policies to deal with the transition to a low-carbon world, the central bank and the banking regulator say in a report analyzing a range of possible climate scenarios.
The Bank of Canada and the Office of the Superintendent of Financial Institutions examined the balance sheets of Royal Bank of Canada
RY-T+1.30%increase
, Toronto Dominion Bank TD-T+0.72%increase
and four large insurance companies to see how the institutions would be impacted by various policies aimed at achieving net-zero emissions.
Bloomberg - Payne Lubbers and Edward Bolingbroke (2022-01-14)
Traders have boosted expectations for the pace of central bank rate hikes in Canada even more than in the U.S., provoking questions about whether the market might have gone too far, too fast.
As the coronavirus pandemic rages on for a third year, Bloomberg’s Stephanie Flanders explains on “Quicktake Stock” why Covid-19 will take a back seat to central banks as a driver for global economies this year.
The Bank of Canada and the Office of the Superintendent of Financial Institutions (OSFI) completed their climate scenario analysis pilot in collaboration with six Canadian federally regulated financial institutions.
Bloomberg - Rich Miller and Craig Torres (2022-01-12)
Federal Reserve Chair Jerome Powell sought to reassure lawmakers and investors on Tuesday that the central bank can pull off the tricky task of bringing down four-decade high inflation without damaging the U.S. economy.
Jerome Powell faced the Senate Banking Committee at his confirmation hearing for a second term at the Federal Reserve on Tuesday, and it’s a sign of the progressive times that a leading issue was the greening of the central bank. Not green as in money, but as in climate regulation.
On Friday, January 14, 2022, the Bank of Canada and the Office of the Superintendent of Financial Institutions (OSFI) will publish the Final Report of the BoC-OSFI Climate Scenario Analysis Pilot.
Canada’s banking regulator could raise capital requirements for banks in the coming years to build up new buffers against risks from climate change and the challenging transition to a greener economy.
Peter Routledge, who leads the Office of the Superintendent of Financial Institutions (OSFI), said at a virtual conference held by Royal Bank of Canada on Wednesday that the regulator “will expect federally regulated financial institutions to build up their capital buffers in the 2020s.”
New capital buffers would be designed to guard against potentially higher volatility and risks to the financial sector as action to combat climate change ramps up, and especially if some of the tougher measures are put off past 2030.
After OSFI lifted those restrictions in November, with Mr. Routledge urging banks to “act responsibly” with their surplus capital, the six largest banks announced dividend increases of 10 per cent to 25 per cent, and plans to buy back 2 per cent to 3.5 per cent of their shares. And in late December, Bank of Montreal
Of all the recipients of Canadian government support in recent years, Petroleos Mexicanos (Pemex) ranks among the strangest. Export Development Canada, a Crown corporation, provided 19 loans to Mexico’s state-owned oil company over 15 years, totalling somewhere between $3-billion and $5.7-billion (EDC only discloses ranges, not precise amounts). The Indian Oil Company received somewhere between $190-million and $425-million. Petrobras, Brazil’s state-owned oil company, got at least $1-billion.
Federal Reserve officials said last month that the U.S. labour market was “very tight” and might need the U.S. central bank not just to raise interest rates sooner than expected but also reduce its overall asset holdings to tame high inflation, according to minutes of their Dec. 14-15 policy meeting.
In one briefing note from last January, officials warned Finance Minister Chrystia Freeland that the issuance of a central bank digital currency would entail “wide-reaching implications for the economy, the financial system” and the Bank of Canada’s operations.
The increase is part of a multi-year plan approved by provinces and the federal government five years ago to boost retirement benefits through the public plan by increasing contributions over time. The increases started in 2019.
In the case of CPP, maximum contributions by employees and employers will be $3,499.80 in 2022, up from $3,166. For self-employed Canadians, the maximum amount will be $6,999, up from $6,332.
Bank of Canada officials spent much of 2021 assuring people that this period of high inflation would be relatively short-lived. The shape of monetary policy next year could depend to a significant degree on whether Canadians continue to believe this narrative.
Reuters - Pete Schroeder and Michelle Price (2021-12-28)
Speculation over who will get the role is once again ramping up, after the Wall Street Journal on Tuesday reported that the White House was considering Sarah Bloom Raskin, a former Fed governor and former Treasury Department official, for the position.
The federal government deposited nearly $26 million into the wrong bank accounts during the last fiscal year — and more than $10 million of it may be gone for good.
Bloomberg - Shelly Hagan, Erik Hertzberg (2021-12-16)
Governor Tiff Macklem underscored that price stability is central to the Bank of Canada’s renewed mandate and indicated that any new flexibility will apply only at times when inflation is low or the economy is weak.
The Fed held rates but will double the speed it tapers its bond-buying, a sign easy credit will come to an end. The Fed will lower its Treasury purchases by another US$20 billion next month. Mortgage backed securities purchases will also fall by US$10 billion. At this pace, the program should be over by mid-March. Before this announcement, RBC didn’t see the program ending until mid-2022.
In November, 2020, Finance Minister Chrystia Freeland sidled past demands for a fiscal anchor, such as setting a target level for Canada’s debt burden, to limit the growth in the federal government’s spending and debt. Instead, she announced, the government would adopt “fiscal guardrails,” broader economic measures that would guide decisions on $100-billion of stimulus spending over three years.
Bloomberg - Steve Matthews and Sarina Yoo (2021-12-15)
More than half predict the Fed’s quarterly forecasts, released after the conclusion of its two-day meeting Wednesday, will show the median of 18 officials projecting two rate hikes next year from current levels near zero.
The Federal Open Market Committee (FOMC) is meeting this week, and its members were greeted Tuesday with the rude welcome of surging wholesale prices. This is more evidence that Chairman Jerome Powell and the Federal Reserve have made a historic mistake that they now have to fix without sending the economy into recession.
BMO chief economist Douglas Porter said, “mission accomplished” because they already hit full employment. His analysis shows prime-aged (15-64) workers’ employment rate is at a record high. The rate is “easily” past pre-pandemic levels. At the start of 2020, the Canadian economy was also considered robust. By no measure is this a weak employment market.
Investment Executive - Christopher Rugaber (2021-12-15)
On Wednesday, the Fed will likely announce that it will reduce its monthly bond purchases at twice the rate that Powell had outlined just six weeks ago. Those bond purchases are intended to lower longer-term rates, so winding them down more quickly — likely by early spring — will lessen some of the economic aid the Fed supplied after the pandemic erupted last year.
The renewal of the Bank of Canada’s mandate agreement with the federal government grants the central bank a five-year licence to, largely, continue doing what it has already been doing.
Michael Sabia spent decades helming major Canadian companies before the Liberal government recruited him to be deputy minister of the federal Department of Finance in late 2020. He accepted the job, he said at the time, in order to drive an economic-growth agenda in Ottawa.
The federal government has directed the Bank of Canada to put more emphasis on full employment as it aims to keep inflation low and stable. It is the most significant change to the central bank’s mandate in three decades, and reflects evolving ideas about the nature of the economy and monetary policy.
“The characterization of inflation as transitory — it’s probably the worst inflation call in the history of the Federal Reserve,” El-Erian said on CBS’s “Face the Nation” on Sunday.
RealVision - Office of the Comptroller of Currency (2021-12-13)
A wave of de-banking may be coming to crypto and fintech over the coming 12 months. Regulators conducted a series of interagency "policy sprints" focused on crypto assets. They recently issued a joint statement with a roadmap of the agencies' plans to clarify throughout 2022 whether certain activities are "legally permissible." Paul Atkins, CEO & Founder of Patomak Global Partners and former SEC Commissioner, joins Real Vision in this exclusive interview to break down what this letter could mean for the banking organizations. Interviewed by Maggie Lake on December 11, 2021. Check out the joint statement from the Federal Reserve, FDIC, and OCC here: https://bit.ly/3ytNTRF
Thank God for financial globalization, the Americans must be thinking. The Russian financial system is no longer an island, as it was in the Soviet era. But it can effectively be turned back into one, just like that – by flicking a switch.
Finance Minister Chrystia Freeland will announce the Bank of Canada’s new mandate on Monday in a long-awaited decision that is expected to keep the central bank’s inflation target at 2 per cent while adding new language about how it should factor in employment when setting interest rates.
Bank of Canada governor Tiff Macklem, like U.S. Fed chairman Jerome Powell, is clearly starting to view continuing high inflation with concern. A change is coming in monetary policy. With demand outrunning supply, our central banks’ policy interest rates need to rise – and may rise a lot.
Economists expect Finance Minister Chrystia Freeland to renew the Bank of Canada’s mandate of aiming its monetary policy at keeping inflation around 2 per cent, and to add new guidance to consider employment levels when it makes its decisions, but stop short of a dual mandate.
While reiterating that officials expect these constraints to eventually ease along with inflation next year, Gravelle emphasized there’s a lot of uncertainty around that outlook. In January, the central bank will reassess whether bottlenecks and shortages are impacting the economy’s ability to grow without fuelling inflation.
The Bank of Canada left monetary policy unchanged Wednesday in a stand-pat interest-rate decision that highlighted stubbornly high inflation and accelerating wage growth while pointing to economic uncertainty tied to the Omicron variant of COVID-19.
The poem isn’t overly critical of Good Guv’nor Macklem but doesn’t portray him as a man of the public. It starts with ignoring the issues they’re meant to prioritize, such as inflation and input costs. Then celebrates the gains stocks made due to “printing” and ignoring that the market sees rates this low as irresponsible. Circumstances that are a tragedy for the working and middle class, but great for the rich.
Canada’s central bank is holding rates, which shouldn’t have been a surprise. The BoC is keeping the 0.25% overnight rate and said they’ll continue executing its reinvestment plan. As of Nov 1, the BoC has promised to only buy Government of Canada (GoC) bonds to replace those rolling off its balance sheet. They said their holdings of GoC bonds are “roughly constant” this morning.
Consider the Bank of Canada, now caught in a trap of its own making. Its mandate, pending an imminent renewal, requires it to maintain inflation in a range around two per cent, but its “forward guidance,” issued incessantly for the past year, has promised to keep the overnight rate of interest at 0.25 per cent until the real economy has returned to “normal” — at a date that lately seems to have been creeping closer from its original value somewhere around the end of 2022. The Bank is stuck with two quantitative targets, one, an inflation target agreed with the government that is its ultimate policy goal, and the other, its own creation, its target for the overnight rate, which is its main policy instrument. And it doesn’t seem to have thought much about what to do if they proved incompatible, which they now have. So: how did the Bank get into this mess, and more important, how does it extract itself? We shouldn’t criticise the authorities for rapid resort to strong and unconventional stimulus when COVID-19 struck last March. To continue with “inflation targeting as usual” in those circumstances would have been a bit like sticking to the rules of the Gold Standard in the summer of 1914. Nor should we really complain that the stimulus turned out to be a bit excessive — better too much than too little under the circumstances, surely? The Bank’s fault, which it has shared to varying degrees with the Fed, the European Central Bank and the Bank of England, lay in failing to appreciate sufficiently the inflationary risk inherent in its measures, and even more so, in issuing its forward interest-rate guidance with an unwarranted degree of certainty.
“We believe globally coordinated efforts on climate risk management help financial institutions understand the consequences of climate change for their business, support their efforts to develop important climate risk management capabilities and capitalize on opportunities presented by climate change,” it said.
If you take your eyes off Canada’s rocket car of a labour market for a moment as it zooms up the recovery road, and look back far behind it, you’ll spot something petty important that it has left in its dust.
Finance Minister Chrystia Freeland has set Dec. 14 as the release date for a fall fiscal update, which will be the first formal revision of the federal government’s economic forecast since the April budget.
“The principal contributor to the decline in stock prices today is the Powell commentary, regarding the upcoming Fed meeting, about accelerating the tapering of their bond buying program, which obviously leads to the prospect that rate hikes come sooner next year,” said Mark Luschini, chief investment strategist at Janney Montgomery Scott in Philadelphia.
“That somewhat hawkish shift in tone caught the market flatfooted,” Luschini said.
Bloomberg - Onur Ant and Asli Kandemir (2021-12-01)
The monetary authority said in a statement that it took action due to “unhealthy price formations” in the lira, which has been in freefall since President Recep Tayyip Erdogan renewed his push for lower interest rates.
Or maybe Ms. Freeland was hinting that the government’s renewal of the Bank of Canada’s five-year mandate – the underlying principles that the bank applies when deciding on interest rates – will be a lot more this time around than the usual rubber-stamping of another five years of the bank’s long-standing 2-per-cent inflation target. Perhaps Ms. Freeland is prepared to step into the debate about the central bank’s monetary policy-setting framework in a way that no Canadian government has in decades.
Program spending, excluding net actuarial losses, between April and September was $225 billion, a decline of about $83.9 billion, or 27.2% drop, from the $308.9 billion in the same period one year earlier.
Prime Minister Justin Trudeau’s government was criticized Thursday for its handling of Canadian-American relations in the wake of an announcement by the United States that it would double the rate of punitive duties on most softwood imports from Canada.
Mr. Trudeau was derided by Conservative Leader Erin O’Toole’s front bench on his grasp of the issues at stake for ordinary people, as deputy leader Candice Bergen challenged him to name the price of common goods such as bread and bacon and beans, and of surf boards – one of the Prime Minister’s favoured vacation activities.
Mexican President Andres Manuel Lopez Obrador's surprise shakeup of the nomination process for the Bank of Mexico's (Banxico) next chief has cast doubt over the bank's rate-tightening cycle as it battles to keep high inflation in check.
Although the word “exuberant” characterizes the housing markets in many Canadian cities & towns since the fall of 2020, we at OSFI believe residential mortgage credit risk has risen only modestly. There remains a risk that residential mortgage credit conditions could deteriorate, but fortunately OSFI has leveraged several prudential tools to increase the margin of safety in that market. In this endeavour, our federal and provincial financial safety-net peers have contributed mightily. Nevertheless, we consider the current imbalance between housing demand and supply to be a material prudential risk, and all actors in the Canadian housing system must take actions if we are to lessen the risk.
On Monday, November 29, and Tuesday, November 30, 2021, the Bank of Canada will host the inaugural Symposium on Indigenous Economies, a joint conference of the Bank of Canada, the Tulo Centre of Indigenous Economics and the Reserve Bank of New Zealand. It is the first in a series of bi-annual events examining the unique economic issues facing Indigenous peoples. The Symposium seeks to build cultural awareness and foster inclusion, strengthen engagement with Indigenous communities and support economic and financial education for and about Indigenous people.
The digital currency will be backed by bank deposits and use a shared platform to accelerate fund transfers and settlement between companies. While there will be a shared platform, a separate "business process area" will mean that the currency can be programmed to meet different business needs of the participants.
President Joe Biden announced Monday he’s nominating Jerome Powell for a second four-year term as Federal Reserve chair, endorsing Powell’s stewardship of the economy through a brutal pandemic recession in which the Fed’s ultralow rate policies helped bolster confidence and revitalize the job market.
Federal Reserve Chair Jerome Powell and Fed Governor Lael Brainard on Monday both noted the corrosive impact high inflation is having on the U.S. economy and American families in what may be a signal that controlling the rapid pace of price increases is now the central bank's top priority.
This is not as simple a matter as you might think. It depends on how deficits are dealt with in later years. When fiscal policy tightens, governments typically avoid raising taxes or cutting spending on the poor. If so, richer provinces like Alberta, Ontario and British Columbia will see a rise in transfers to other provinces. On the other hand, if the federal government splurges on policies that benefit the rich, such as electric cars or licensing restrictions, net transfers from wealthier provinces might well decline.
WSJ - Andrew Duehren and Richard Rubin (2021-11-19)
The House was set to pass a roughly $2 trillion education, healthcare and climate package Friday, as Democrats corralled their slim majority to approve the centerpiece of President Biden’s economic agenda after months of wrangling.
Through the first nine months of 2021, foreign investors bought $126.0-billion-worth of Canadian securities, up from $108.7 billion for the same period in 2020.
COVID-19 has accelerated risks, which require accelerated responses to those risks from institutions and regulators. Even before the onset of the pandemic economic pressures due to extended period of low interest rates, uncertain and volatile business conditions, and growing exposures to non-financial risks were shaping the future of the insurance sector.
OSFI - Superintendent Jamey Hubbs at the Canadian Regulatory Technology Association annual meeting (2021-11-18)
OSFI’s approach to digitalization is determined through our mandate. OSFI’s purpose as stated in the OSFI Act is “to ensure that financial institutions and pension plans are regulated by an office of the Government of Canada so as to contribute to public confidence in the Canadian financial system”. We see the potential to unlock greater value for Canadians who expect their regulators to temper, but not inhibit, innovations. Our approach is in finding that balance to foster financial stability and contribute to Canadians confidence in their financial system.
JPMorgan Chase & Co. economists said they now expect the U.S. Federal Reserve to raise interest rates next September, becoming the latest on Wall Street to jettison a forecast for the central bank to stay on hold through 2022.
The Bank of Canada is grappling with labour market uncertainty as it tries to gauge the health of Canada’s economic recovery and estimate a timeline for interest rate hikes in the face of surging inflation, deputy governor Lawrence Schembri said Tuesday.
COP26, supposedly humanity’s “last best chance,” struggled to yield even faint hope of keeping temperatures from rising 2 C, let alone 1.5 C. Even so, egged on by catastrophists and the mainstream media, Canadian politicians are adopting increasingly damaging climate policies. Should we be surprised that Canada’s delegation to COP26 was the world’s largest? Surprised, not so much. Appalled, definitely.
Reuters - Andy Bruce and William Schomberg (2021-11-17)
British inflation surged to a 10-year high last month as household energy bills rocketed, according to data on Wednesday that will bolster expectations that the Bank of England will raise interest rates next month.
Canada’s major banks are expecting larger tax bills in 2022 as a new surcharge on financial institutions’ profits over $1-billion could be pushed through by Ottawa as soon as the start of 2022.
Avery Shenfeld, chief economist at the Canadian Imperial Bank of Commerce, said Friday that he expects to see new language around the idea that achieving the central bank’s two per cent inflation target sustainably requires an economy near full employment.
President Joe Biden is still weighing whether to keep Jerome Powell as chair of the Federal Reserve for a second term or elevate Fed Governor Lael Brainard to the post, an administration official said on Wednesday.
The inflation target renewal, done jointly with the federal government every five years, is due by year-end and comes at a time when central banks around the world are grappling with how to manage an uneven rebound from the COVID-19 pandemic.
Bank of Canada Governor Tiff Macklem has reiterated that Bitcoin cannot be classified as a currency because it lacks attributes to be used in transactions.
“But if inflation continues to surprise to the upside and hiring proves sluggish, expect the Fed to field more questions about whether it can continue to hold rates low until maximum employment is achieved,” the bank added.
Peter Routledge, head of the Office of the Superintendent of Financial Institutions, said Thursday that the measures “are no longer necessary” and that decisions about capital distribution belong with boards of directors and management of the financial institutions.
After reductions in November and December, “the committee judges that similar reductions in the pace of net asset purchases will likely be appropriate each month, but it is prepared to adjust the pace of purchases if warranted by changes in the economic outlook,” the U.S. central bank’s policy-setting Federal Open Market Committee said in a statement Wednesday following a two-day meeting.
The RBA said it would stop using yield caps and abandoned a view that its benchmark interest rate won’t rise until 2024, joining other central banks that are tightening policy as inflation risks mount.
The bank’s economists are calling a very sharp climb for Canadian interest rates. They have forecast an increase of 100 basis points (bps) in the second half of 2022. It would be followed by another increase of 100 bps in 2023. An overnight rate of 2.25% would be the highest Canadians have seen since 2008.
The federal government ran a deficit of more than $57 billion over the first five months of its fiscal year, about $114 billion less than the treasury pumped out during the same stretch one year earlier.
Should tax cheats with unreported income pay their fair share of federal income taxes? That’s what’s at stake in the congressional tax compliance proposal that would reel in tax cheats by tracking bank account transfers. The proposal has riled industry players and stoked misinformation campaigns. Amid this backdrop, the Treasury Department issued a fact sheet today with details on a revised proposal to catch wealthy tax cheats, this time setting the bank account threshold at $10,000, up from $600, and providing an exemption for wage earners.
Over the last several days, we’ve seen the Outrage Machine in action over a new Treasury proposal to require banks to report to the IRS new information on U.S. bank accounts, in addition to the existing reporting of interest payments. This proposal, as described at CBS News (among, of course, many other sites) would require banks to report the gross annual inflows and outflows in bank accounts, ostensibly to catch high-income tax-dodgers. Because the threshold for reporting was set at $600, skeptics are, well, skeptical of the assertion that this change would only affect, as the Biden administration claims, those earning over $400,000 per year.
"The main forces pushing up prices — higher energy prices and pandemic-related supply bottlenecks — now appear to be stronger and more persistent than expected," the bank said, adding that it now thinks Canada's multi-year high inflation rate will go higher still — topping out at about five per cent, the bank said — before coming back down to the range of about two per cent next year.
Chrystia Freeland remains as deputy prime minister and minister of finance. Randy Boissonnault, one of two Liberal Alberta MPs, has been named associate minister of finance as well as minister of tourism.
Mona Fortier, who previously held the associate minister of finance role, will be president of the Treasury Board.
Governor Tiff Macklem is expected to reduce weekly government bond purchases by one half on Wednesday to $1 billion (US$809 million). That will mark the fourth time over the past 12 months the central bank has rolled back a program that has poured hundreds of billions into the financial system since the start of the COVID-19 pandemic.
The leaders of most of the world's biggest greenhouse gas emitters gather in Glasgow from Sunday, aiming to thrash out plans and funds to tilt the planet towards clean energy. But the man running the biggest of them all likely won't be there.
Earlier this month, a prominent U.S. economic think tank invited the Atlanta regional Federal Reserve president to deliver a speech on the outlook for inflation. He showed up with his Transitory Jar.
Bank of Canada Governor Tiff Macklem has one objective: managing inflation, which the central bank defines as keeping the Consumer Price Index (CPI) advancing at an annual rate of about two per cent.
Robert Fay is the managing director of digital economy at the Centre for International Governance Innovation. David Dodge is a former governor of the Bank of Canada and is senior adviser at Bennett Jones LLP.
G&M - HOWARD SCHNEIDER AND ANN SAPHIR (2021-10-21)
The U.S. Federal Reserve on Thursday banned individual stock purchases by its top officials and unveiled a broad set of other restrictions on their investing activities, taking action roughly six weeks after reports of active trading by some U.S. central bank policy makers triggered an ethics uproar.
“We haven’t made a decision to issue one yet because we basically don’t see a compelling need under current circumstances,” Bank of Canada Deputy Governor Timothy Lane told a virtual panel organized by a Washington think-tank.
WSJ - Ben Eisen and Christine Mai-Duc (2021-10-20)
Bank of America Corp. thought helping states such as California hand out unemployment benefits would be good business. Then millions of Americans lost their jobs at once.
With all the subtlety of a dropped hammer, Bank of England Governor Andrew Bailey dispelled what little doubt was left that U.K. interest rates would be raised before the end of this year. The central bank would “have to act” to reduce inflationary pressures, he declared at an online panel held on Sunday by the Group of 30, an organization of financiers and academics. The whole gilt yield curve shifted higher Monday in reaction, with two-year yields at 0.75%, the highest since May 2019; 10-year yields have doubled over the past two months, making it the worst-performing major government bond market. U.K. money markets have priced in 50 basis points of rate hikes by year-end. It is overreaction, of course. But what else could the markets do as they bore witness to the previously super-dovish BOE’s road-to-Damascus conversion? The central bank had just until recently toyed with negative rates. In the minds of most BOE policymakers, the debate whether inflation is transitory is over. Bailey’s remark makes clear that inflation is now flashing red because energy prices have soared, and those surges are expected to spill over into consumer behavior, business pricing and, ultimately, potential wage demands. The semantics of inflation is for the birds — and they are turning out to be hawks.
“If successfully implemented, the global minimum corporate tax rate will be mildly credit negative for sovereigns that have used tax policy as a key component of a broader competitiveness strategy to attract investment, such as Ireland, Hungary, and many Caribbean economies, which typically have corporate tax rates below 15%,” Moody’s said.
Bets in the overnight swaps market are increasingly tilting toward a move early next year, well ahead of the U.S. Federal Reserve. Traders have now priced in three hikes in Canada by the end of 2022, which would bring the policy rate to 1 per cent from the current 0.25 per cent.
Democrats concerned by the tight race for Virginia governor are rushing to bolster Terry McAuliffe’s campaign in a state that could set the national momentum for the critical midterms and the 2024 presidential election.
Bank of Canada Governor Tiff Macklem is standing by his assertion that the current bout of high inflation is transitory, even as top Canadian bank executives question that narrative and warn that price pressures could persist.
At the time, her bosses at Finance as well as her former professors thought they had cracked the code by promoting a policy mix that emphasized free markets over government intervention. It came to define mainstream policy-making and was even given a name: the Washington Consensus, so called because the International Monetary Fund and the World Bank — both based in Washington, D.C. — were by then making loans contingent on spending discipline, market-determined exchange rates and the like. “The Washington Consensus emerged at a time when it felt like market forces could deliver a lot of what we wanted, and if we focused on that, the benefits of increased growth, increased productivity, would be distributed to people in different income brackets and across different cultural groups,” Wilkins said in an interview on Oct. 13. “History has proved us wrong in that regard.”
Does the G20 even still meet? Maybe no one cares, but we probably should. Canada does better when the world’s bullies agree to down swords and respect a common set of rules and norms. Think back to 2008 and 2009. A smallish country’s banking system, apparently the soundest in the world, was still at the mercy of whatever shenanigans they were getting up to in the world’s major financial centres. Canada has never really had the economic clout necessary to make people take notice, and it’s been a long time since we spent enough on the military to be of much help on security matters. But Ottawa has a tradition of sending technocrats out into the world to help keep the international conversation going, contributing ideas and/or time to efforts that have little direct connection to their day jobs.
Reuters - Susan Cornwell and Richard Cowan (2021-10-13)
The Democratic-controlled U.S. House of Representatives gave final approval on Tuesday to legislation temporarily raising the government's borrowing limit to $28.9 trillion, pushing off the deadline for debt default only until December.
After years of missed deadlines and wrangling over how to handle global tech firms such as Facebook Inc. and Alphabet Inc.’s Google, Friday’s deal included a 15 per cent minimum rate for corporations and the main parameters of how much profits of multinationals would be taxed in more countries: 25 per cent of profits over a 10 per cent margin.
President-elect Joe Biden chose former Federal Reserve Chair Janet Yellen to lead the U.S. Department of the Treasury for her gravitas, quiet consensus building, and attention to data—qualities that served her well during a decades-long central banking career. Democrats and Republicans alike laud her judgment.
For FRFIs, OSFI agrees guidance on climate-related risks should be principles-based and consider the Canadian context as well as international developments. Furthermore, any such guidance would be best informed by results from the Bank of Canada-OSFI joint pilot project on climate risk scenarios, for which stakeholders can expect further communication later this year. Taking these factors into account, OSFI expects to communicate next steps on its climate-related policy work early next year.
Bank of Canada governor Tiff Macklem says high inflation could be “a little more persistent” than the central bank previously thought, while the economic recovery could take longer than expected.
Some politicians think they've found a silver bullet for the impasse over the debt limit, except the bullet is made of platinum: Mint a $1 trillion coin, token of all tokens, and use it to flood the treasury with cash and drive Republicans crazy.
Cities such as Toronto suffered a fiscal blow after the pandemic forced them to lock down, crimping revenue from local sources such as transit and parking. But federal and provincial governments stepped in with billions in aid, strengthening the “implicit guarantee” on Canadian municipal debt, said Hooper, a senior portfolio manager with the Atlanta-based firm.
The move escalates a dispute in which U.S. President Joe Biden’s administration has been reluctant to intervene. Last May, U.S. Secretary of Energy Jennifer Granholm told reporters the White House had no plans to get involved, saying it would be up to the courts to settle.
The US government is hurtling towards an unprecedented debt default in roughly two weeks’ time if lawmakers do not act to raise the federal limit on borrowing and enable the Treasury department to pay government commitments already approved by Congress.
The searches soon to get underway for two new top U.S. central bankers will be an important test for what has been a rallying cry of sorts for proponents of diversity: that boards matter.
No longer are central bankers seeking to do whatever they can to ensure money is available for households, companies and governments to borrow at exceptionally favourable rates. Along with Norway’s monetary tightening, the first in any advanced economy since the pandemic began, four emerging economy central banks — Pakistan, Hungary, Paraguay and Brazil — also raised the cost of borrowing this week, while the U.S. Federal Reserve and Bank of England both signalled a move towards tightening monetary policy. These guardians of monetary policy are generally satisfied that the economic recovery has proved stronger than they feared at the start of the year. But they are beginning to worry that money might become too cheap for too long. That would threaten rising inflation, excess borrowing and even financial instability as the world emerges from the coronavirus crisis.
A Chinese state-owned enterprise struck a deal to buy most of China Evergrande Group ’s stake in a commercial bank for $1.5 billion, the latest sign that the country’s authorities are trying to help the property giant resolve some of its financial troubles.
The regulator is working with the Bank of Canada and the private sector to better understand the risks that the transition will bring, and is also consulting widely on how to identify, measure and respond to climate-related risks, with more requirements coming, he said.
“They want to go later. They want to ensure the self-sustaining recovery takes shape and that the output gap closes,” Mulraine said during a panel discussion at the Bloomberg Canadian Fixed Income Conference on Tuesday. “They will go on or just after the output gap closes.”
OSFI’s mandate says nothing about climate, but it does make us responsible for contributing to public confidence in Canada’s financial system. Getting to net zero by 2050 will mean Canada’s economy will have to adjust. Canada’s financial system will be a critical enabler to that adjustment and OSFI has an obligation to ensure that FRFIs and federally regulated pension plans (FRPPs) are fit to manage the risks that will accompany that adjustment.
Reuters - Richard Cowan and David Morgan (2021-09-28)
A sharply divided U.S. Senate failed on Monday to advance a measure to suspend the federal debt ceiling and avoid a partial government shutdown, as Republican lawmakers denied the bill the votes necessary to move forward.
Reuters - David Lawder and Andrea Shalal (2021-09-28)
The top Democrat and Republican on the U.S. Senate Foreign Relations Committee have urged President Joe Biden to "ensure full accountability" over a World Bank data-rigging controversy that has embroiled International Monetary Fund chief Kristalina Georgieva.
As an organization, OSFI is dedicated to increasing Indigenous representation. In addition to facilitating underrepresented groups, including Indigenous peoples, to apply for positions, we are expanding our reach to more areas of the country where members of those groups reside. We are also supporting our managers to familiarize themselves with the benefits of employment equity hiring and to increase diversity on their selection boards and teams.
"Tomorrow, September 27, we will begin debate on the Bipartisan Infrastructure Framework on the Floor of the House and vote on it on Thursday, September 30, the day on which the surface transportation authorization expires," Pelosi said in a letter to her fellow Democrats released by her office.
Central banks were the first economic responders to the Covid-19 pandemic. From Washington to Wellington, policy makers swiftly deployed tools developed during the global financial crisis and found new ways to shore up credit markets vital to the functioning of modern commerce.
Friday’s fiscal monitor says the deficit to date now reflects current economic challenges caused by Covid-19, including ongoing public health restrictions.
British finance minister Rishi Sunak has ordered two immediate reviews of the country's financial regulation related to the collapse of supply chain finance firm Greensill Capital.
That refers to the policy gathering on Nov. 2-3, though he left the door open to waiting longer if needed and stressed that tapering was not meant to be a direct signal on the timing of rate liftoff.
The Federal Reserve is expected to clear the way on Wednesday for reductions to its monthly asset purchases later this year and show in updated projections whether higher-than-expected inflation or a resurgent coronavirus pandemic is weighing more on the economic outlook.
U.S. Federal Reserve officials will lay bare how soon and how often they think the economy will need interest rates rises over the next three years when they release new forecasts at their policy meeting on Wednesday, with investors on alert for a faster pace of tightening.
CADUSD-0.18%decrease
edged higher against its U.S. counterpart on Friday as the central bank of top commodity consumer China moved to calm markets, while Canada’s 10-year yield climbed to a five-week high.
U.S. Treasury Secretary Janet Yellen issued a fresh plea for Congress to raise the federal debt ceiling on Sunday, arguing a default on U.S. debt would trigger a historic financial crisis.
With Canadians set to vote Monday in a highly competitive election, the outlook for the two largest sectors in country’s stock index hangs in the balance.
Polls say the race is close. If Prime Minister Justin Trudeau wins, as now looks likely, he may follow through on a promise to increase taxes on the biggest banks and insurance companies and impose stricter emissions rules on oil and gas companies. Financial and energy stocks make up 44% of the benchmark S&P/TSX Composite Index.
U.S. banking regulators are working on new climate risk management guidance for large lenders, a top official said on Wednesday, in another sign of efforts to incorporate the risks posed by rising temperatures into financial rules.
Foreign investors are growing more worried that Canada's federal election on Monday could result in a deadlock that hampers Ottawa's response to the COVID-19 pandemic and further slows the economic recovery from the crisis.
The Democratic architects of a key overhaul of U.S. financial regulation a decade ago called on President Joe Biden to reappoint Fed Chair Jerome Powell to a second term, rebuffing arguments he has been weak on regulatory issues.
After years of shock-and-awe stimulus, the Bank of Japan is quietly rolling back radical policies introduced by its bold chief Haruhiko Kuroda and pioneering controversial new measures that blur the lines between central banking and politics.
The U.S. Treasury Department met with a number of industry participants this week to quiz them about the risks and benefits posed by stablecoins -- a rapidly growing type of cryptocurrencies, the value of which is pegged to traditional currencies, according to three people with direct knowledge of the meetings.
The group discussed the rapid growth of stablecoins, which are cryptocurrencies that attempt to peg their values to a conventional currency, like the U.S. dollar, according to the Treasury. Regulators discussed their potential uses, as well as risks to end users and the financial system.
Bank of Canada Governor Tiff Macklem has provided the clearest picture yet on how the central bank plans to reduce monetary stimulus, saying it expects to start raising interest rates before entirely winding down its bond buying program.
The Conservatives are promising to balance the federal budget within 10 years without spending cuts or tax increases, even as they add tens of billions of dollars in new spending on top of the 2021 budget.
The message from Canada’s central bankers was that “even though the recovery lost a bit of steam in the second quarter, the ingredients are there for economic activity to strengthen through the remainder of the year,” Sri Thanabalasingam, an economist at Toronto-Dominion Bank, said in a note to clients. “While the Delta variant could complicate matters, the bank, like us, do not expect the virus to blow the recovery off course in the fourth quarter.”
The Bank of Canada has returned from an eventful summer with a tricky job on its hands: how to communicate vital information while keeping your mouth shut.
As expected, governor Tiff Macklem and his deputies opted to leave the current level of stimulus unchanged at the end of their latest round of interest-rate deliberations on Sept. 8. The election raised the bar for a shift in policy, as Macklem would only risk becoming a campaign issue if economic conditions demanded it. They didn’t, allowing the governor to turn the central bank’s latest interest-rate decision into a non-event.
Remember, this isn’t just low rates. They’re flooding the system with credit to push the cost of goods higher. Delaying a taper would mean adding billions more in credit stimulus for longer.
The Bank of Canada will likely tread carefully this week, mutedly acknowledging a weaker-than-expected economy in the midst of a heated election campaign.
The Bank of Canada is widely expected to hold the line on monetary policy this week after a series of economic releases showed weaker-than-expected growth even as inflation hit a decade-high.
Just 160 businesses filed for insolvency in July, marking a 35-year low in new filings, according to new data from the Office for the Superintendent of Bankruptcy. The record low, which represented a 28.3 per cent decrease in filings from the month prior, is largely due to the federal government’s pandemic wage and rent subsidies and other business support programs such as the Canada Emergency Business Account, which have been extended until October.
The platform estimates the federal deficit will decline from $156.9-billion this year to $32-billion in 2025-26, but offers no timeline for erasing it entirely. Those annual deficits would be $14-billion higher per year on average than the pre-election forecast the Parliamentary Budget Officer released in August.
State-backed firms are set to take a sizeable stake in a key Ant Group asset for the first time, three people told Reuters, in a move that will loosen the Chinese fintech giant's grip on a data treasure trove of over 1 billion users but help revive its IPO.
Nixon unhitched the U.S. dollar from the value of gold. The move changed the global monetary system almost overnight. The eventual result was the floating international exchange rates we still use today. The worldwide economy had expanded greatly and U.S. dollar use was widespread. It was good to have the global currency, but there were four times as many dollars in circulation as the U.S. had in gold reserves to back them up. This Bretton Woods exchange rate system, named after the New Hampshire town where it was hammered out after the Second World War, was running out of steam.
A prominent bank economist hurled criticism at Canada’s statistics agency after it revised its economic figures for April and May with little explanation, giving Prime Minister Justin Trudeau’s political opponents an opening to criticize his record.
Cleveland Federal Reserve Bank President Loretta Mester said on Monday that the U.S. economy is recovering strongly but she is not yet convinced that recent inflation readings will be enough to satisfy the price stability goal the U.S. central bank revamped a year ago.
Prime Minister Justin Trudeau of Canada would reject claims that his leadership style is similar to that of former U.S. President Donald Trump or British Prime Minister Boris Johnson. But in at least in one respect the comparison is getting closer to hitting its target.
The Federal Reserve will start dialing back its ultra-low-rate policies this year as long as hiring continues to improve, Chair Jerome Powell said Friday, signaling the beginning of the end of the Fed's extraordinary response to the pandemic recession.
While the financial world waits for the Federal Reserve to start reversing its ultra-loose policy stance, recent moves by a clutch of other central banks signal the days of pandemic-era accommodation are already numbered even as COVID-19 continues to impede smooth economic recoveries around the world.
At a campaign stop in Vancouver, the leader of the governing Liberals promised to hike the corporate income tax rate by three percentage points on profit over $1 billion (US$793 million) at financial institutions. The measures, which would bring the rate to 18 per cent from 15 per cent currently, are expected to generate $2.5 billion for government coffers over the next four years, starting in 2022-3, according to a party news release.
Goldman Sachs economists have raised the odds that the U.S. Federal Reserve will announce the start of tapering its bonds purchases in November, predicting the central bank will likely opt to dial back purchases by US$15-billion then and at meetings that follow.
FP - Christopher Condon, Steven T. Dennis and Saleha Mohsin (2021-08-25)
Powell has worked Congress during his three years at the helm like no Fed chair since Alan Greenspan. But where Greenspan was a regular of the cocktail party circuit, Powell has taken a more workmanlike approach.
A think tank highly critical of Federal Reserve chair Jerome Powell’s record on banking regulation released an assessment of his four-year tenure on Monday that is by turns scathing and complementary, highlighting the competing considerations as U.S. President Joe Biden weighs whether to reappoint him.
Bloomberg - Ott Ummelas and Niclas Rolander (2021-08-23)
The resignation of Sweden’s Stefan Lofven brings the largest Nordic economy a step closer to its first-ever female prime minister, and with it the task of fixing an ailing political system.
Central bankers and journalists will assemble for the virtual Jackson Hole conference later this week. Their agenda will be broad. The future path of quantitative easing, the health of the labor market, and other critical monetary and regulatory matters will command center stage. But we can also expect pronouncements on issues once considered the domain of elected politicians, including climate change, racial justice and inequality.
Reuters - Alun John and Scott Murdoch (2021-08-20)
Global banks and other financial institutions in Hong Kong are scrambling to find out details of China's planned imposition of an anti-sanctions law on the city, and trying to understand how it could impact their operations in the financial hub.
The Afghani fell as much as 1.7 per cent on Tuesday to 83.5013 per dollar, a fourth day of decline, according to data compiled by Bloomberg. The central bank was told there would be no more dollar shipments on Friday, which curtailed its ability to supply currency and led to more panic, acting Governor Ajmal Ahmady wrote in a Twitter thread.
G&M - LAILA BASSAM AND NAFISA ELTAHIR (2021-08-16)
Lebanon’s central bank governor said nobody was running the country, hitting back after government criticism of his decision to halt fuel subsidies that have drained currency reserves.
Justin Trudeau has triggered a long-expected snap election, seeking to gain a majority on the strength of his Liberal government’s record in managing COVID-19 – but opposition parties are casting the campaign as unnecessary and a blatant attempt at a power grab amid the fourth wave of the pandemic.
Prime Minister Justin Trudeau is expected to trigger an election on Sunday by asking Gov. Gen. Mary Simon to dissolve Parliament even though Canada’s top doctor says the country is now in the grips of a fourth wave of COVID-19.
“When OSFI introduced this special treatment of leverage ratio exposure measures in the spring of 2020, it was the appropriate response at the time to the uncertainty created by the pandemic,” said Ben Gully, OSFI’s assistant superintendent, regulation sector, in a statement.
Conservative Leader Erin O’Toole pitches his position on free trade as a stand against the failed policies of the Liberal government. In reality, his battle is with the ghosts of his own party.
The very existence of the debt ceiling is utterly superfluous. Every couple of years members of Congress have to vote to allow borrowing to fund measures that they’ve already approved through individual spending bills.
Its main function is political: Whichever party isn’t in power at the time uses it to try to either extract something from, or embarrass, the other side. On top of that, the limit isn’t really the limit. By invoking the vague catchall of “extraordinary measures,” Uncle Sam can keep on borrowing even after it’s hit the cap—or when the limit has been reinstated following a suspension, as was the case at the end of last month. Given that the alternative is either what’s known as a technical default or a seizing up of everyday government spending, that’s a good thing, even if you’re a fiscal hawk, which is an endangered species these days.
Leah Anderson is taking over as interim head of the Canada Deposit Insurance Corporation (CDIC) after Peter Routledge left the post to lead the Office of the Superintendent of Financial Institutions (OSFI).
The U.S. summary – which in Canadian law is presumed to be reliable – is missing a key word: “Huawei’s engagement with Skycom is normal business co-operation.” The word “controllable” does not appear.
The U.S. Treasury Department’s anti-money-laundering unit is undergoing its second leadership change this year, as current acting director Michael Mosier prepares to leave at the end of the week.
The sitting head of the central bank made the unusual move of writing an opinion column. Instead of using fancy data points, he whipped out a pen and provided no evidence to explain the current inflation environment. It wasn’t his first time either, with economists previously asking him to provide any evidence for the statements he’s made.
Bloomberg - Kevin Orland and Paula Sambo (2021-08-04)
Canada’s securities regulators plan to merge two industry groups that oversee financial advisers into a single organization, a move intended to address years of complaints about the overlapping roles and higher costs of the groups.
Central bankers should let inflation run temporarily above target when the economy is coming out of a severe recession, according to new Bank of Canada research that provides a window into how the central bank is thinking about inflation as the pandemic wanes.
In June, the bank assumed responsibility for monitoring online payment systems, such as digital wallets, run by fintech andpaytech companies. The new system will see the bank maintain a registry of retail payment providers in Canada, and monitor the strength of their risk-management protocols.
Reuters - David RandallGertrude Chavez-dreyfuss (2021-07-29)
Investors looking for clear guidelines on when the Federal Reserve will begin tapering its massive bond purchases were left waiting Wednesday, with all eyes next on the annual Jackson Hole conference of central bankers in August.
Today, the Office of the Superintendent of Financial Institutions (OSFI) issued the final version of Guideline E-4 Foreign Entities Operating in Canada on a Branch Basis. This guideline replaces existing guidelines E-4A Role of the Chief Agent and Record Keeping Requirements and E-4B Role of the Principal Officer and Record Keeping Requirements.
Central bankers should let inflation run temporarily above target when the economy is coming out of a severe recession, according to new Bank of Canada research that provides a window into how the central bank is thinking about inflation as the pandemic wanes.
The province of Ontario broke the record for a Canadian dollar green bond sale, raising C$2.75 billion ($2.19 billion) on Tuesday to fund a train line expansion among other purposes.
The combination has pushed global inflation readings higher. Canada’s consumer price index (CPI) is currently reading 3.6% higher than a year before. US CPI came in even higher, showing annual growth of 5.4% at the last measure. This is the highest rate both countries have experienced in a very long time. Naturally, people are starting to worry about how high this can get over the next few years.
U.S. Treasury Secretary Janet Yellen urged lawmakers on Friday to increase or suspend the nation's debt limit as soon as possible and warned that if Congress does not act by Aug. 2 the Treasury Department would need to take "extraordinary measures" to prevent a U.S. default.
The Bank of Canada has appointed long-time central banker Sharon Kozicki to the position of deputy governor – the second change to the bank’s governing council this month.
The Bank of Canada’s strongest argument against the current concerns of rising inflation is the big hole in employment left by COVID-19. But what if that hole suddenly filled in?
Two top Bank of England officials surprised investors this week by saying the time might be nearing for the British central bank to rein in the huge stimulus programme it has used to steer the economy through the coronavirus crisis.
G&M - JASON CLEMENS, MILAGROS PALACIOS AND NIELS VELDHUIS (2021-07-16)
One of the differences between being on the opposition and government benches is that the government must be held accountable for actual performance. The evidence is quite clear that the Trudeau government has increased taxes, has overseen a marked increase in government indebtedness and recorded comparatively weak economic growth. Rhetoric can’t change that reality.
It’s imperative Canadians distinguish between convenient political rhetoric and reality when it comes to the country’s finances, particularly as we approach a potential fall election. The Trudeau government continues to promulgate three assertions that must be clarified.
The Canadian dollar has been losing ground over the past two months, but don’t pin the blame on softer commodity prices, shifting Bank of Canada monetary policies or general risk aversion among global investors.
The Governing Council also discussed the amount of slack in the economy and the outlook for potential growth. Estimates of these measures have always been imprecise but are especially difficult given the rapid changes wrought by the pandemic. In the projection, economic slack is absorbed in the second half of 2022. To help manage the uncertainty surrounding this assessment, we will be watching a broader spectrum of indicators of slack, including a range of labour market measures.
The central bank cut its government bond purchases to a target of $2-billion a week, from $3-billion, further reducing the stimulus put in place early in the COVID-19 pandemic. It held its policy rate at 0.25 per cent and reaffirmed it does not expect to raise interest rates before the second half of 2022 at the earliest.
Yeah, that’s not a typo. Billion, with a B. Per week. Today the BoC announced their widely expected move to trim their QE program. The rate of QE will be slowed to $2 billion per week, down from the $3 billion prior. The program had been cut earlier this year as well, down from $4 billion per week. The program’s size was just reduced by a third, and it’s half as much as it was earlier this year.
The recent positive Canadian data, on top of several months of higher-than-expected inflation, should give the central bank conviction to move ahead with another cut to its weekly federal government bond-buying program, known as quantitative easing, analysts argued. The consensus view among economists is for the bank to reduce its pace of QE purchases – which are designed to hold down interest rates and encourage borrowing – to $2-billion a week from $3-billion.
“There is no doubt that we have willingly chosen to forgo some profitable business that our competitors would find appealing,” then-chief executive Evan Siddall wrote in August, in a letter to Canada’s biggest lenders, following the implementation of the stricter standards. Siddall used the letter to caution the banks and others mortgage lenders about risky lending, warning that “there is a dark economic underbelly to this business that I want to expose.”
Collapsed finance group Greensill Capital paid a salary of more than $1 million a year to former British Prime Minister David Cameron, the Financial Times reported on Monday, citing people familiar with the matter.
A hike from the US would allow the BoC to hike, with much less pressure on currency exchange. If Canada hiked alone, it would slow credit growth and inflation, but may also impact exports. If both countries do it at the same time, the loonie’s increase against the US dollar would be minimal. That gives the BoC a little more room to make the next increase more comfortable… or hike even more if needed.
The Canada Infrastructure Bank is refusing to disclose bonuses paid to executives despite a unanimous vote by MPs on a House of Commons committee calling for the amounts to be revealed.
The June meeting marked a turn in the central bank’s comfort with inflation risks amid heightened price pressures as the economy reopens from the pandemic, buoyed by massive monetary and fiscal-policy support. Officials also continued monthly purchases of US$80 billion of Treasuries and US$40 billion of mortgage-backed securities until “substantial further progress’ was made on inflation and employment.
Canada’s third-largest province will run a deficit this fiscal year that’s “significantly larger” than expected when the pandemic began, which will likely lengthen the time to return to fiscal balance, S&P said in a statement Wednesday explaining the one-notch downgrade to AA+. The move comes less than two weeks after Fitch Ratings took a parallel rating action.
It’s okay to admit it. After all, five big U.S. banks are increasing their dividends, and some are also planning to buy back their shares, moves that will handsomely reward their investors as the economy recovers from the pandemic.
Some 130 countries have agreed on a global minimum tax backed by U.S. President Joe Biden as part of a worldwide effort to keep multinational firms from dodging taxes by shifting their profits to countries with low rates.
Remember that time the head of Canada’s central bank said the housing bubble was good for the economy? Soak it up, because that may be the last time it ever happens. The Bank of Canada (BoC) finished its technical report on the Terms-of-Trade Economic Model (ToTEM). The model, which is used by the BoC as their primary forecasting tool, has now entered its third update in 15 years.
After years of negotiations, the United States, Canada and 128other countries have announced a new global pact to overhaul the way large multinational companies are taxed.
Dozens of monetary authorities around the world are contemplating launching central bank digital currencies (CBDCs), largely in response to the proliferation of cryptocurrencies and private digital currencies backed by large technology companies, such as Facebook Inc.
British Columbia has lost a triple-A credit rating, with Fitch Ratings Inc. downgrading the province in part because of Canada’s rising federal debt burden.
Several of the most senior officials in the federal Finance Department are leaving government – or have already left – after playing key roles in shaping Ottawa’s massive policy response to the COVID-19 pandemic.
Central banks are bracing for a showdown with purveyors of cryptocurrencies and other private forms of money. To help win that battle, they are counting on a still murky concept known as central bank digital currencies, or CBDCs.
For several hundred years, the people living on the Pacific island of Yap used giant rocks as a basic form of money. The most valuable of these massive limestone rings, called rai stones, weighed several thousand kilograms. As a result, they weren’t easily exchanged when an item was bought or sold. Boulders that were too big to roll from one owner to the next were left in a permanent resting place.
The federal government has named Peter Routledge as the head of Canada’s banking regulator, choosing a former financial analyst and federal policy adviser with a keen understanding of the financial system’s intricacies who also has recent experience running a federal agency.
Mr. Routledge will take the helm of the Office of the Superintendent of Financial Institutions (OSFI) for a seven-year term as superintendent on June 29. He moves from his current post as chief executive of the Canada Deposit Insurance Corp., after a stint at the federal Finance Department and a Bay Street career analyzing and rating large Canadian banks and other institutions.
President Joe Biden on Wednesday fired the head of the Federal Housing Finance Agency who had been appointed by his predecessor Donald Trump, acting hours after the U.S. Supreme Court expanded presidential powers to make it easier to oust the agency chief.
A small piece of your monthly Canada Pension Plan benefit is missing if you retired recently and chose to start payments immediately rather than delay them.
Former Bank of Canada deputy governor John Murray is cautioning the central bank against “mission creep” as it moves into the final months of a major review of its monetary policy framework.
Banks in the European Union must have a 10-year plan spelling out how they will deal with environmental, social and governance (ESG) risks to their bottom line, the bloc's banking watchdog said on Wednesday.
Investment Executive - Christopher Reynolds (2021-06-23)
Green said federal authorities avoid pursuing Canada’s biggest tax cheats but go after small business owners who don’t pay their taxes under a “two-tiered system” pocked with “loopholes.”
Carolyn Wilkins, the first and only woman to serve as senior deputy governor of the Bank of Canada, begins a three-year stint as one of five external members of the Bank of England’s Financial Policy Committee (FPC) this week.
Reuters - Lewis KrauskopfKate DuguidSaqib Ahmed (2021-06-22)
With all eyes on the U.S. central bank this week, some investors are looking to a parade of Federal Reserve speakers to calm market volatility, saying the reaction to the Fed's June meeting was too extreme.
Many of the generous supports Canada extended during the pandemic are coming to an end. Amongst them, the bank highlights two of the biggest: the Emergency Wage Subsidy, which ends in June; and the Canada Recovery Benefit, which ends in September. Unless extensions are announced, many fear this can be a setback to the recovery. The NBC analysts don’t see it that way.
“The first path is deciding to work together, with the United Kingdom abiding by its obligations and engaging in good faith. And the second path, is if the United Kingdom continues to act on a unilateral basis.”
President Joe Biden will meet with financial regulators on Monday for an update on the country's financial systems and institutions, press secretary Jen Psaki said on Friday.
The dollar index , which tracks the greenback against six major currencies, was up 0.37% at 92.213, its highest since mid-April. That puts the index on pace for a weekly gain of nearly 2%, its best weekly jump in about 14 months.
The Bank of Japan may start debating ways to phase out its extraordinary stimulus programme, such as by ditching negative interest rates, around the time Governor Haruhiko Kuroda's term ends in 2023, said former central bank executive Eiji Maeda.
Looking more broadly at the economy as a whole, we forecast strong consumption-led growth in the second half of this year as vaccinations progress further and restrictions ease. Fiscal stimulus from the federal and provincial governments will also make an important contribution to growth. Strong foreign demand and higher commodity prices are expected to drive exports and business investment, leading to a more broad-based recovery. In our April MPR, we projected that the economy will grow by around 6½ percent this year, about 3¾ percent in 2022 and 3¼ percent in 2023.
Canada’s banking regulator is raising a key threshold for banks’ capital reserves higher than prepandemic levels, rebuilding a buffer that was used to guard against stress in the financial system from the current crisis.
With U.S. inflation rising faster than expected and the economy forecast to grow at its quickest pace in decades this year, some policymakers have begun questioning whether the Fed should continue to keep its benchmark short-term interest rate near zero and leave unchanged a massive bond-buying program put in place to stem the economic fallout from the pandemic.
Britain's finance ministry called on the European Union to open talks on financial services, after the London Stock Exchange on Tuesday urged the bloc to avoid protectionism.
G&M - STEVE AMBLER, JEREMY KRONICK, AND WILLIAM B.P. ROBSON (2021-06-15)
Some indicators, however, are less reassuring. Some of the bank’s own “core” inflation measures, which strip out volatile CPI components such as gasoline and food, are also running above 2 per cent. The bank highlights six on its website: CPI-trim, CPI-median, CPI-common, CPIX, CPI-XFET and CPIW. Each has its advantages and disadvantages, but each is meant to get at inflation’s underlying trend, discounting short-term volatility. Hence, the bank can better set monetary policy with an eye toward the medium-term horizon of six to eight quarters, at which point the bank expects inflation to be at the 2-per-cent target.
Investment Executive - Christopher Rugaber (2021-06-15)
Powell said at the time that he would want to see a “string” of hiring reports showing about 1 million added jobs each month. The job market has yet to reach that total in any month this year, though employers have posted a record-high number of open jobs.
“As a central bank we've always recognised the importance of innovation for the global financial system, and we look to support it wherever possible in the safest manner. Of course, the private sector can create technological and commercial innovation, it is a comparative advantage and expertise. But in the public sector, we have a very vital role in enabling and channelling its development so that it can provide efficient but also safe finance for consumers and businesses across the country.”
In a statement for the record of a Senate Banking subcommittee hearing, ABA notes that choosing between the various CBDC designs requires “serious and complex policy tradeoffs” and that too often CBDC proponents take a “highlight reel” approach to describing CBDC, “cherry picking all the perceived benefits, while downplaying the serious risks to consumers and our financial system.”
The European Union and Canada are holding a summit in Brussels on Monday and Tuesday, with Prime Minister Justin Trudeau meeting EU counterparts after the NATO and G7 meetings. Centre stage in the discussion is the landmark bilateral trade agreement, the Comprehensive Economic and Trade Agreement, or CETA, which has driven an increase in two-way commerce, including a 15-per-cent boost in EU exports to Canada in 2020 alone.
The debt ceiling is the maximum amount the U.S. government can borrow, as directed by Congress, to meet its financial obligations. When the ceiling is reached, the Treasury cannot issue any more bills, bonds, or notes. It can only pay bills through tax revenues.
The International Monetary Fund said on Thursday it has economic and legal concerns regarding the move by El Salvador to make bitcoin a parallel legal tender, further clouding the outlook for an IMF-backed program and widening spreads on the country's bonds.
The Bank of Canada seems pretty intent on ignoring, as much as possible, the raging Canadian dollar. In most instances, that would be a bad idea. In the current circumstances, it may be good policy.
The Federal Reserve has indicated it would need congressional help if the central bank moves ahead with a plan to create a digital dollar. But lawmakers aren't yet ready to give their stamp of approval.
At a hearing Wednesday, Senate Banking Committee members raised questions about how a Fed-designed digital currency would be structured, how it would complement the private sector and whether a digital dollar is even necessary, among other concerns.
Jörg Kukies, deputy finance minister of Germany, told the Financial Times that the Franco-German proposal was “a pragmatic way of ensuring a truthful and compliant Basel implementation on the one hand and respecting the political mandate of [the EU’s economic and financial affairs council] and G20 for no significant increase in capital requirements as well”.
Finance Minister Chrystia Freeland said Saturday an agreement made by Group of Seven (G7) countries on taxing multinational companies and setting a global minimum corporate tax rate was just a first step toward a global deal.
The policy is known as “open banking” and it could provide a competitive shock to a banking system whose idea of competition is engaging in price wars over the issuance of government-backed mortgages. The review has been so slow in coming to what many say are foregone conclusions that some have wondered if the big banks are doing their best to stand in the way of progress. Whatever the reason for the slow going, any delay from this point on will have everything to do with Freeland herself, as she now has all the information and context that she needs.
The PCAOB regulates the audits of publicly traded companies. Congress established it with the Sarbanes-Oxley Act of 2002 following accounting scandals at Enron Corp. and other now-defunct firms. Mr. Duhnke was sworn in as PCAOB chairman in January 2018 under then-President Donald Trump.
The SEC’s new Democratic chairman, Gary Gensler, took control in April. A former banker and regulator, he is expected to be tougher on companies and look to increase investor protections and reporting requirements, for example around disclosures about environmental, social and governance issues.
Finance ministers from the G7 group of rich nations are meeting in London on Friday for two days of talks aimed at moving closer to a global deal to raise more tax from the likes of Google, Facebook and Amazon.
Saudi Arabian oil group Aramco (2222.SE) is in talks with banks for a U.S. dollar-denominated bond issue, two sources said, seeking to raise money ahead of large commitments for its major shareholder, the Saudi government.
It’s not exactly tapering, but the Federal Reserve is starting the clock on withdrawing the emergency measures it used to support financial markets during the Covid-19 pandemic.
The central bank said late Wednesday that it would start to gradually sell the $13.7 billion portfolio of U.S. corporate debt and exchange-traded funds it amassed through its Secondary Market Corporate Credit Facility, which was created during the worst of the pandemic-inspired market meltdown in March 2020. The facility marked an unprecedented intervention for the Fed because it effectively pledged to plow hundreds of billions of dollars into company debt if no one else would. That backstop, even if it wasn’t fully used, quickly restored investor confidence, led to a ferocious rally in practically every corner of the bond market and encouraged record-breaking amounts of debt sales from investment-grade and high-yield borrowers alike.
A mountain of dollars on deposit in China has grown so large that banks are struggling to loan the currency and traders say it poses a risk to official efforts to control a fast-rising yuan.
Stephen Poloz had only been Governor of the Bank of Canada for a few months in the late summer of 2013, when he gave a speech that defined his unique communication style and signalled a new era for a traditionally staid institution.
Carney, who led the Bank of Canada from 2008 and 2013 and the Bank of England from 2013 to 2020, advised the Liberal federal government on its latest budget and is widely considered to have political aspirations to run for the Liberal party.
Australia’s central bank is approaching a decision on whether the economy is strong enough for it to join Canada and New Zealand in signaling a move away from emergency mode.
The early deficit figure for the 12-month period between April 2020 to March 2021 compares to a deficit of $21.8 billion over the preceding fiscal year.
The Bank of Canada is closely monitoring the rise of cryptocurrencies and other digital forms of cash, but has no plans at the moment to launch its own digital loonie, a deputy governor said Wednesday.
The Bank of Canada is thinking in more concrete terms about how its digital currency might look and work but it does not currently see a strong case for issuing one, a deputy governor said on Wednesday.
The budget and its stimulus plan certainly didn’t ignore measures to fuel growth in labour supply (most notably, the national child care plan) and small-business investment and innovation (such as the Canada Digital Adoption Program). But the vast bulk of spending in the package over the next year continues to be targeted at wage subsidies and income supports for workers and employers hit by COVID-19 shutdowns and restrictions. The effect of these programs is, ultimately, to keep money flowing into consumers’ pockets – which keeps consumer demand humming.
The Bank of Canada is also ramping up its research agenda. The FSR included the results of a deep study of natural disasters in Canada based on data that dates to 1900. Using artificial intelligence, the central bank determined that about 40 per cent of the country’s total household debt is held by households living in parts of the country that face “high exposure” to wildfires and other such catastrophes.
With global borrowing costs probably as low as they can go, high debt levels will start to matter more in coming years, a Barclays study found, highlighting Brazil as the country at greatest risk of a hit to growth and debt sustainability.
The crackdown on unregulated crypto trading in Canada has begun, with the Ontario Securities Commission (OSC) bringing allegations against a Seychelles-based firm for failing to heed the regulator’s warning to get registered.
That's why the first and biggest risk outlined by the bank in its report was "a large decline in household income and house prices" caused by an external trigger event. It is hard to be sure what form such a trigger event could take. Macklem referred at one point to a "sharp repricing of risk." Such an event might lead to, say, a sudden rise in global interest rates, a stock market crash or a weakening of global trade. Maybe even the collapse of bitcoin.
The Financial System Review (FSR) summarizes the Governing Council’s judgment on the main vulnerabilities and risks to the stability of the Canadian financial system and highlights the efforts of the Bank and other Canadian and international regulatory authorities to mitigate those risks. After a brief survey of macrofinancial conditions, the principal vulnerabilities and risks are examined.
The Bank of Canada said volatility in cryptocurrency assets is an emerging vulnerability to the country’s financial system, a day after a major selloff in the sector.
When Bank of Canada Governor Tiff Macklem delivered a speech last week championing diversity and inclusion, he took a moment to deliver a mea culpa from the upper echelon of the central bank.
The title of his remarks was “Including everyone helps us all.” Macklem talked about the importance of diversity, noting that research on the question is settled: strategy and decisions made by leadership teams that feature women, racialized individuals, and disabled people do better than C-suites and boards of directors that are dominated by white men. “Diverse and inclusive groups make better decisions,” Macklem said. “That’s because they can avoid groupthink that happens when decision-makers all have similar backgrounds and approach problems the same way.”
FP - Julie Gordon and David Ljunggren (2021-05-18)
The Bank of Canada said on Thursday that some of the monetary policy tools it is using to address the COVID-19 pandemic, such as quantitative easing (QE), could widen wealth inequality and that it was looking closely at the issue.
The Financial System Review will be released on Thursday, May 20, 2021. The Financial System Review (FSR) summarizes the Governing Council’s judgment on the main vulnerabilities and risks to the stability of the Canadian financial system and highlights the efforts of the Bank and other Canadian and international regulatory authorities to mitigate those risks. After a brief survey of macrofinancial conditions, the principal vulnerabilities and risks are examined.
Bank of England governor Andrew Bailey has said that money market funds (MMFs) proved in the early stages of the pandemic that they were “not sufficiently resilient”. That is despite efforts to increase the stability of MMFs after their involvement in the demise of Lehman Brothers and the crash in 2008.
G&M - BILL CURRY AND PATRICK BRETHOUR (2021-05-12)
Conservative and NDP MPs questioned the minister about a Globe and Mail investigation, which found that hundreds of publicly traded companies, or their wholly owned subsidiaries, together received at least $3.6-billion in Canada Emergency Wage Subsidy payments as of late January. Among those companies were some of the biggest names in corporate Canada, as well as dozens of hedge funds and wealth managers.
The federal government is set to launch a public-private advisory body aimed at accelerating the adoption of sustainable-finance measures, on which Canada risks lagging behind its trading partners.
Former British Prime Minister David Cameron repeatedly contacted senior ministers over a four-month period in 2020 to lobby for the now-failed, supply-chain finance firm Greensill Capital, according to documents published on Tuesday.
American Banker - Brendan Pedersen, Kevin Wack (2021-05-12)
For nearly a decade, the Federal Reserve avoided choosing sides in the protracted, high-stakes dispute between banks and retailers over debit card fees.
The North American country plans to sell five-year bonds in the first benchmark-sized transaction in the currency since January 2020, Bloomberg data show. The bonds, which are expected to be priced Tuesday, are being marketed at around 8 basis points over U.S. Treasuries, according to people familiar with the matter.
The central bank published a paper examining the operation of Canada’s electronic funds transfer system for large payments, the Large Value Transfer System (LVTS), during the pandemic.
But that comforting scenario rests on some optimistic to highly optimistic long-term assumptions about productivity growth, economic expansion, interest rates and inflation. If all of those factors don’t turn out as favourably as the Finance department is forecasting, then that steady march to stability could instead turn into a permanently elevated debt burden – or even an upward spiral.
The Liberal government’s 2021 budget underestimates the likely size of federal deficits by about $5.6-billion a year and puts Ottawa on a long-term path of higher debt, says Parliamentary Budget Officer Yves Giroux.
Regarding Mickey D. Levy and Michael D. Bordo’s “The Fed in the Sand as Inflation Threatens” (op-ed, April 27): I have been calling on Fed Chairman Jerome Powell to release his plan to curb the effects of inflation for several months. Last month, I finally heard back from him. He told me that he doesn’t want inflation that substantially exceeds 2%, or inflation for a prolonged period.
Overall the programs, which include stepped-up spending on infrastructure, childcare and education, will make a “big difference” to inequality, Yellen said.
In the aftermath of an economic and financial challenge that Federal Reserve Chairman Jerome Powell recently likened to Dunkirk—the urgent rescue of British and other Allied troops from France in World War II—there’s a remarkable uniformity of opinion on the Federal Reserve Board of Governors. Apparently, they all agree on the appropriateness of the Fed’s monetary-policy decisions. That’s what worries me.
In 2015, the federal Liberal platform committed the party to reversing a Conservative plan to gradually raise the retirement age (or at least the eligibility age for Old Age Security payments) to 67 from 65, arguing that seniors needed the money more than Ottawa.
“I would say, ‘Governor, I’m sure glad we’re learning from the lessons of history,’” Easter, a Liberal, said during Macklem’s testimony at his committee on April 27. “I’m one, and there may be others on this committee, who faced a 23-per-cent interest rate in the 1980s and I’ll tell you we paid for that for a very long time.”
The BoC’s April Monetary Policy Review (MPR) said inflation data would be unreliable. More specifically, the three measures — CPI-trim, CPI-median, and CPI-common would be unreliable. Arseneau says, “last week’s imbroglio [embarrassing situation] over inflation in Canada comes at a bad time.”
The combination of the Bank of Canada’s loose monetary policy and the federal government’s massive spending is a necessary response to an epic catastrophe. There’s an echo of the 1960s and 1970s, a period that inspired the music of Leonard Cohen, Joni Mitchell and Neil Young, but ended in one of the worst recessions in Canadian history.
David Dodge has had a few days to take a look at the budget that the federal Liberal government unveiled last week. He’s not a fan – of the math or the substance.
"Amid progress on vaccinations and strong policy support, indicators of economic activity and employment have strengthened," the U.S. central bank said in a unanimous policy statement at the end of a two-day meeting.
That's been the case in British Columbia, where a government-commissioned report estimated money launderers parked $5.3 billion in real estate in 2018 alone — enough that it drove up housing prices by five per cent.
Bank of Canada Governor Tiff Macklem said the central bank is not concerned about a temporary spike in inflation that is expected to take Consumer Price Index growth to around 3 per cent in the coming months.
The Bank of Canada is looking to improve how it researches and analyzes economic issues relating to Indigenous communities as part of a joint initiative with the central banks of New Zealand and Australia.
New threats that increasingly keep banking regulators up at night present a fresh set of challenges because they fall outside the traditional boundaries of financial risk management. They include global threats such as climate change, fast-moving innovations in technology and cybersecurity and the emergence of new asset classes such as crypto assets – an uncharted and largely unregulated area for financial institutions that is “growing in importance,” Mr. Gully said.
In a Monday evening vote, lawmakers from the New Democratic Party backed Finance Minister Chrystia Freeland’s plan to help the Canadian economy recover from its pandemic-induced losses. The vote in the House of Commons was 178 to 157 in favor.
Bloomberg - Theophilos Argitis and Ye Xie (2021-04-23)
In a surprise move, it accelerated the timetable for a possible interest-rate increase and began paring back its bond purchases on Wednesday. That made Canada the first major economy to signal its intent to reduce emergency levels of monetary stimulus.
It’s a turn in policy by Governor Tiff Macklem that shows there’s a limit to how much he’s willing to test the upper boundaries of inflation, with new forecasts showing the central bank expects the biggest persistent overshoot of its 2% target in at least two decades. The question is whether Canada’s situation is unique, or foreshadowing the start of a global exit from stimulus.
Canada’s inflation-targeting central bank just acknowledged that inflation is headed above its 2-per-cent target in the post-COVID-19 recovery. And you know what? It’s okay with that.
New signs of a strong recovery — including the bank's prediction of a stunning global growth rate of nearly seven per cent this year — plus indications that the underlying foundation of the Canadian economy has not suffered serious damage from the COVID-19 pandemic, mean the central bank is scaling back on monetary stimulus.
Nothing makes our central bankers, academics and government officials sound more out of touch with Main Street these days than when they talk about low levels of inflation. The problem is that ultra-low interest rate policies justified by CPI tracking don’t seem to help much when income levels are stagnating and asset prices are surging.
“I thought the bank might try to complain about or argue against CAD strength -- it didn’t,” Anderson said. “The bank merely made the factual statement that CAD had rallied alongside commodity prices. Based on that, I’m slightly less worried about the BOC trying to push back against CAD strength in the future.”
There was a time in this fair land when a federal budget was an economics document. These days, it is a social policy document aimed to buy votes. It’s actually quite sad.
The Treasury Department has a warning for the emerging world: The export-your-way-to-prosperity template has fallen out of favor. Once thought to be in U.S. interests — as a way of getting plentiful cheap goods — this model of development is now meeting more skepticism. The message for Asia should be loud and clear, even if some economies got a pass last week.
In its semiannual assessment of trading partners’ foreign-exchange policies, Treasury stopped short of labeling Taiwan, Vietnam and Switzerland as currency manipulators, even though they met the criteria. In normal times, they would have been branded with a Scarlet M for deliberately holding their currencies down. But officials couldn’t determine whether their less-than-ideal practices were done to seek a trade advantage, or simply to buttress markets and alleviate recession. The pandemic skewed capital flows globally, and many countries — the U.S. among them — responded in kind. This time, the trio got away with a rap on the knuckles. The softer approach is a shift from the Trump administration, which tagged Hanoi and Bern as manipulators, and admonished a bunch of others, including India, Thailand, Singapore and South Korea.
The federal government is pinning its new “fiscal anchor” to a rapid postpandemic recovery, with economic growth expected to put the government’s debt-to-GDP ratio on a downward trajectory over the next few years, despite continuing deficits.
Ottawa added more than $350-billion to its accumulated debt last year, and expects to run another deficit of $154.7-billion this year. Federal debt now stands at $1.08-trillion or 49 per cent of GDP, up from $721-billion or 31.2 per cent before the pandemic.
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economists and business groups were calling for the government to adopt a fiscal anchor – that is a target, such as a debt-to-GDP ratio, to moderate deficit spending and debt accumulation. The government responded with a loosely defined commitment to unwind its emergency spending and reduce the size of its debt relative to the size of the economy “over the medium term.”
The outlook suggests officials still want to guarantee the recovery from last year’s coronavirus recession by maintaining ultra-low borrowing costs and asset-buying programs. That may require them to accept any accompanying bounce in inflation.
Canadian real estate prices are rising at rates even the banks are warning about. There’s a lot of reasons this is happening, but one rarely discussed is the supersized borrowing from the Government of Canada (GoC). A lot of cash was needed during the pandemic, but Canada’s discretionary spending topped the G20. To help facilitate this spending, the Bank of Canada (BoC) made use of quantitative ease (QE). The unconventional policy tool’s use is debated, but its impact is well established.
If I were finance minister, I’d be asking myself the following question: With a recovery just getting going following a deep recession, should I act like Marc Lalonde in 1983 or Paul Martin in 1994? Or should I chart my own course?
Bloomberg - Kait Bolongaro and Theophilos Argitis (2021-04-19)
Justin Trudeau is set to unveil a vision for Canada’s post-pandemic recovery that will double as an election platform, heavy on new spending and assurances the mounting debt is affordable.
Internal documents from the Financial Transactions and Reports Analysis Centre of Canada (FinTRAC) obtained through freedom of information legislation paint a picture of substantial disruption at the agency, especially in the first few months of the pandemic, when hundreds of employees were abruptly forced to work from home.
How should a central bank respond to global warming? In Sweden, a body created to monitor government efforts to fight climate change says the law that guides monetary policy needs a serious overhaul.
Cecilia Hermansson, the vice chair of the Swedish Climate Policy Council, is advising the government to include environmental considerations in the Riksbank Act, which is currently under review. She also says an existing proposal to amend the law doesn’t go nearly far enough.
FT - Henry Foy, Katrina Manson, Michael Peel (2021-04-15)
On Wednesday, the US for the first time formally blamed SVR, Russia’s foreign intelligence service, for the SolarWinds hack, which affected at least nine federal agencies and 100 companies. One senior administration official told reporters the hack gave Russia “the ability to spy on or potentially disrupt more than 16,000 computer systems worldwide”.
According to Federal Reserve Chair Jerome Powell, the U.S. economy is at an "inflection point" with expectations that growth and hiring will pick up speed in the months ahead, but some risks remain, particularly any resurgence in the coronavirus pandemic.
Europe faces a predicament. Even as it struggles to contain the Covid-19 pandemic, it’s setting itself up for another crisis — this one financial. To ensure the viability of the common currency at the heart of the European project, the EU’s leaders will have to cooperate in ways they’ve so far resisted.
Mnangagwa has previously issued warnings to private companies he blames for undermining his efforts to turn around an economy plagued by annual inflation of 241% and foreign-currency shortages. Last year, his government closed the Zimbabwe Stock Exchange for five weeks and singled out the largest mobile operator, Econet Wireless Zimbabwe Ltd., for undermining the nation’s currency through its mobile money service
Most respondents also said they would prefer an approach that balances the level of interest rates to benefit both savers and borrowers. Additionally, the majority viewed inflation targeting as the most easily understood approach.
For OSFI, our focus in these matters is prudential. That is to say that our unique role is to ensure that Canadians continue to enjoy financial stability as climate-related risks manifest themselves. This is a very important role, and one that we take very seriously, especially as we are the only arm of the Government of Canada that is equipped to meet this prudential responsibility.
Last fall, as Chrystia Freeland began laying the groundwork for a postpandemic recovery strategy that would heap more debt onto the federal government’s already immense pile, she felt obliged to assure Canadians that, no, she hasn’t invited a three-initialled economic bogeyman to live under our bed.
Carolyn Wilkins, the former second-in-command at the Bank of Canada, has been appointed to the Bank of England committee that oversees financial stability in Britain.
The federal government has been borrowing a lot of money to fight the pandemic. But with national debt rising, lawmakers disagree on how to deal with that debt and pay for priorities going forward. WSJ’s Gerald F. Seib explains. Photo illustration: Emma Scott
The massive increase in government spending in Canada and around the world in response to the COVID-19 pandemic has been accompanied by a siren song in the form of a new economic theory: “Modern Monetary Theory,” or MMT for short. But as we begin to emerge from the acute phase of the pandemic we need to turn a deaf ear to that song. Now that inflation concerns are beginning to stir it is hard to imagine governments raising taxes or cutting spending anytime soon to keep inflation in check — yet that’s how MMT advocates would control inflation, with what traditionally have been regarded as fiscal policies rather than the customary monetary tools of interest rates and liquidity measures.
That would put America’s headline rate above many Western nations. Biden’s blueprint also includes a minimum tax of 21% on the income U.S. companies earn on assets like patents and trademarks outside the United States, up from the current floor of around 10%.
Last week, the CMAIO, which was established in 2015 to guide the launch of a national capital markets regulatory authority, put its operations on pause and laid off its staff. The organization said that it could resume its work in the future “when there is greater certainty around cooperative system launch timelines.”
Yellen said it was important to make sure governments “have stable tax systems that raise sufficient revenues in essential public goods and respond to crises, and that all citizens fairly share the burden of financing government.”
FP - Steve Ambler, Jeremy M. Kronick and William B.P. Robson (2021-04-06)
On March 23, the Bank of Canada announced the upcoming suspension of some of its major asset-purchase programs. This is good news. Financial stresses at the beginning of the pandemic a year ago led the bank to buy the debt of provincial governments and private companies. Those stresses are now in the past and Canadians should welcome the bank’s retreat from a role fraught with economic and political risks.
In 2019, the Reserve Bank of New Zealand, which in 1989 became the first central bank to adopt a formal inflation target, was told by Jacinda Ardern’s government to include “maximum sustainable employment” as an objective. Earlier this year, Ardern added “sustainable house prices, including dampening investor demand for existing housing” to governor Adrian Orr’s agenda.
Reuters - Steve Holland, Jarrett Renshaw (2021-04-01)
“It’s a once-in-a-generation investment in America, unlike anything we’ve seen or done since we built the interstate highway system and the space race decades ago,” Biden said in unveiling the program in Pittsburgh.
Bloomberg - Ari Altstedter and Erik Hertzberg (2021-04-01)
The Bank of Canada is seeing “worrying” signs that some Canadians are taking on too much debt to buy into the nation’s hot housing market.
In an interview with the Financial Post, Governor Tiff Macklem said there is evidence that loan levels relative to home values are growing -- an indication that some borrowers could be overextending. He also warned people have begun to make purchases based on the belief prices will continue rising.
“Canadians are stretching and that is worrying.” Macklem said. “If Canadians are basing their decisions on the kinds of price increases that we’ve seen recently are going to continue indefinitely, that would be a mistake. They’re not sustainable.”
At the same time, Macklem indicated the central bank can do little given interest rates need to stay low to support the recovery.
CIBC clients are exempt from the Covid-19 pet owners tax. In effect from March 31st, municipal authorities require Canadian's to adhere to strict lockdown measures with the excpetion of pet owner that must walk their pets regularly. Therefore, dog and cat owners have been exempt from curfews. Consequently, a Canadian pet owners will be required to pay a dog and cat tax that would require every cat owner in to pay $40 (about $35) a year. But fear not, because you get a cat licence, complete with a picture of your cat, to show the tax man that you and your kitty are law-abiding citizens. CIBC clients are exempt because they have decided to compensate clients that own pets.
The federal government and seven provinces and one territory are shutting down the organization charged with creating a national securities regulator due to waning political support for the project in jurisdictions such as Ontario and British Columbia.
The Federal Reserve won’t bend its interest rate or bond-buying policies to help finance the federal government’s rising deficits, Christopher Waller said on Monday in his debut speech as a member of the U.S. central bank’s board of governors.
G&M - MARK RENDELL AND DAVID PARKINSON (2021-03-27)
It was Mar. 27, 2020, and the central bank had just unveiled a plan to buy Canadian government bonds at the astounding pace of at least $5-billion a week.
In a speech on Tuesday, deputy bank governor Toni Gravelle said the central bank will let its commercial paper, provincial bond and corporate bond buying programs expire in the coming months, now that debt markets are functioning normally. It will also end two sales and repurchase agreement – or “repo” – programs launched last March to pump cash into financial institutions that faced a liquidity crunch early in the pandemic.
“I want to be clear here: moderating the pace of purchases while adding to our holdings would simply mean that we are still adding stimulus through QE, but at a slower pace,” Gravelle said. “It would not mean we are removing stimulus. We would be easing our foot off the accelerator, not hitting the brakes.”
The Office of the Superintendent of Financial Institutions (OSFI) plays an essential role in building and preserving resiliency in Canada’s financial system. OSFI’s commitment to implementing the international Basel III Framework has strengthened Canadian banks and improved their ability to handle financial shocks, so they can continue to support economic growth while remaining competitive.
U.S. Treasury Secretary Janet Yellen on Wednesday said U.S. banks look healthy enough to be allowed to pay dividends and repurchase stock, an updated view that reflects top economic officials’ growing confidence in the recovery from the coronavirus pandemic.
Chris Chezepock thought he was making a simple call to unlock his online taxpayer account when he rang up the Canada Revenue Agency on Wednesday morning.
Consumers pare back spending as they either lose their jobs, or worry about the prospect of unemployment. That hurts sales at businesses, which then cut back on payroll, and those workers then reduce their spending. And for 80 years, the typical political response to myriad typical recessions has been to dump a lot of money into the economy to break that cycle of misery.
Canada’s inflation rate edged up in February on rising gasoline prices, coming in below analysts’ estimates but setting the stage for a jump in consumer price index growth in the coming months.
Turkey is paying for past errors that cost it credibility and let inflation accelerate to nearly 16%, over three times its target. In the UK, prices have been rising too slowly rather than too fast. And even if they overshot for a bit, public and market expectations of inflation remain firmly anchored. The contrast explains why using monetary policy to support economic recovery is a luxury not available to all. (By Swaha Pattanaik)
The trial of a Canadian man detained in China since late 2018 on espionage charges has ended after about two hours, a lawyer said, one day after relatives pleaded for his release.
Michael Spavor and Michael Kovrig will face their first court hearings Friday and Monday respectively, Canadian Foreign Minister Marc Garneau said in an emailed statement, adding that diplomats have requested to attend. “We believe these detentions are arbitrary, and remain deeply troubled by the lack of transparency surrounding these proceedings,” Garneau said.
The central bank envisages keeping rates near zero to the end of 2023 despite a significantly brighter assessment of growth and higher inflation over the near term. After the release, traders trimmed some of the more-aggressive positioning they’ve been building for a “lift-off” by earlier in 2023.
Like many small businesses across China, Zheng Weijun’s freight company had struggled to obtain credit from the state-dominated banking system. But in 2018 the 12-lorry business discovered Fincera, a peer-to-peer platform in Hebei province that collected money from retail investors starved of returns and channelled it to borrowers, mainly small trucking and logistics companies.
CRA's move comes in the middle of one of the most complicated tax seasons in recent memory, as millions of Canadians prepare to file taxes after receiving COVID-19 benefits.
A reduction of purchases by the BoC could be supportive of the Canadian dollar, which has been the best performing G10 currency this year, with a gain of about 2 per cent against the U.S. dollar. The central bank said this month that the currency has been relatively stable against the greenback.
By raising its 2021 growth forecast to 6.5%, the Fed joined others in substantially improving its outlook for the U.S. economy. The forecast for the unemployment rate was reduced to 3.5%. Meanwhile, the Fed moved its favored measure of inflation — the PCE — up from 1.8% to 2.4%, for this year, with the core measures rising more moderately to 2.2%.
Despite these historically large revisions, the central bank’s policy statement remained virtually unchanged. The implied message — that the Fed will be even more ready to support an economy running ever hotter — was more than confirmed by Powell’s ultra-dovish comments at his press conference.
These measures included a reduction in the Stressed Value at Risk (“SVaR”) multiplier, a component of the market risk capital requirements that ensures that a minimum amount of capital is held against stress periods. At the beginning of the pandemic, the volatility in capital markets increased such that the level of additional conservatism achieved through the SVaR multiplier was temporarily not needed and banks were permitted to reduce the level of the multipliers used.
The new technology platform uses custom-built algorithms to monitor, in real-time, a mix of data points from official emergency sources and weather alert systems to offer one-to-one, personalised support for customers impacted by natural disasters.
The Bank of Canada has expanded the size of its daily bond sale and repurchase program, making more securities available to dealers in an attempt to counteract the impact that its large ownership of Government of Canada bonds is having on short-term funding markets.
Policy makers in Canada need to keep supportive measures in place as the economy recovers from the COVID-19 pandemic before turning to debt management, the Organization for Economic Co-operation and Development said Thursday.
OSFI launched a consultation on measures to implement the remaining features of the latest edition of the global capital adequacy regime, known as Basel III — which includes capital, liquidity, leverage and disclosure requirements — that was developed in response to the global financial crisis.
The Bank of Canada has set a high bar for the eventual raising of interest rates. But that doesn’t mean the central bank is equally reluctant about scaling back its quantitative easing program, even if it’s not yet willing to say so out loud. They’re two separate and distinct questions.
The Bank of Canada acknowledged it had underestimated the economy’s ability to power through the second wave of COVID-19 infections, scrapping its January prediction that gross domestic product (GDP) would contract in the first quarter of 2021.
Economists unanimously predict policy makers led by Governor Tiff Macklem will leave their key interest rate unchanged at 0.25% at a 10 a.m. decision Wednesday in Ottawa. There’s speculation, however, they could signal plans to pare back the central bank’s asset purchases at the next meeting in April.
Central banks are flooding economies with cheap credit, and trying to prevent bubbles. Well, some countries are trying to prevent bubbles. Canada has decided home price inflation is an uncontrollable consequence of the environment. In fact, the country’s central bank welcomed the rapid home price growth as “needed.”
The Bank of Canada today held its target for the overnight rate at the effective lower bound of ¼ percent, with the Bank Rate at ½ percent and the deposit rate at ¼ percent. The Bank is maintaining its extraordinary forward guidance, reinforced and supplemented by its quantitative easing (QE) program, which continues at its current pace of at least $4 billion per week.
Junko Nakagawa, a Nomura Holdings executive picked by Prime Minister Yoshihide Suga to join the Bank of Japan’s board, is seen as a policy moderate who’s likely to support the board’s current direction after her trailblazing rise in Japan’s male-dominated finance industry.
Nakagawa, now 55, was the first woman appointed to Nomura’s board, where she served as the group’s chief financial officer in the early 2010s, before becoming head of the asset management unit in 2019. If approved, she would replace Takako Masai, another former banker, as the only woman on the BOJ’s nine-member board.
On Wednesday, March 10, 2021, the Bank of Canada will announce its decision on the target for the overnight rate. A press release will provide a brief explanation of the decision.
The Bank of Canada will be walking a tightrope when communicating its rate decision this week, as rising bond yields and strong economic data have put its downbeat forecast at odds with brightening market expectations for a postpandemic recovery.
Bloomberg - Lizzy Burden and Andrew Atkinson (2021-03-08)
Bank of England Governor Andrew Bailey said risks to the U.K. economy remain tilted to the downside, a remark that may rein in expectations that policy makers may soon shift toward containing inflation.
“To us, it now appears likely that the U.S. output gap will be closed by the end of 2021 — an astonishing feat given just how ugly things were a year ago and highlighting once more how fundamentally different this latest recession has been from all those that have gone before it,” the report said.
Mark Machin already had one foot out the door of Canada Pension Plan Investment Board when he was forced, under pressure, to resign as chief executive officer last week after receiving a COVID-19 vaccination in the United Arab Emirates.
The British government has announced the country’s biggest corporate tax hike in almost 50 years in a bid to slowly fill the fiscal hole left by the pandemic.
Evan Siddall, the outspoken housing agency chief who once told Canadians not to worship homeownership, is stepping down in April, ending his controversial and combative tenure.
Most sectors have almost reached pre-crisis levels, and the laggards that were hit hardest by the pandemic “are also the ones with potentially the most to gain should behaviour start to respond favourably to vaccinations over 2021 into 2022,” the report said.
Federal subsidies for wages and rent will be extended at current levels until June 5, a move Finance Minister Chrystia Freeland said will cost about $16-billion.
Justin Trudeau was more committed to borrowing his way out of the Covid-19 crisis last year than almost any other leader in the developed world. That cushioned the blow of the pandemic, but raises some hard questions about what Canada got for all that spending.
Today's order states that trading is being suspended because of questions about recent increased activity and volatility in the trading of these issuers, as well as the influence of certain social media accounts on that trading activity. The order also states that none of the issuers has filed any information with the SEC or OTC Markets, where the companies' securities are quoted, for over a year. As a result, the SEC suspended trading in the securities of: Bebida Beverage Co. (BBDA); Blue Sphere Corporation (BLSP); Ehouse Global Inc. (EHOS); Eventure Interactive Inc. (EVTI); Eyes on the Go Inc. (AXCG); Green Energy Enterprises Inc. (GYOG); Helix Wind Corp. (HLXW); International Power Group Ltd. (IPWG); Marani Brands Inc. (MRIB); MediaTechnics Corp. (MEDT); Net Talk.com Inc. (NTLK); Patten Energy Solutions Group Inc. (PTTN); PTA Holdings Inc. (PTAH); Universal Apparel & Textile Company (DKGR); and Wisdom Homes of America Inc. (WOFA).
Statistics Canada took a pratfall this week on some key inflation calculations, and it couldn’t have come at a much more inopportune time. So why doesn’t Bank of Canada Governor Tiff Macklem – whose central responsibility is all about inflation – sound more bothered?
FT - Philip Stafford and Delphine Strauss in London and Sam Fleming (2021-02-25)
Its stance has increasingly drawn criticism from the UK’s central bank governor, who on Wednesday focused on the tussle over clearing houses, which sit between deals and prevent defaults from creating a chain reaction across markets.
Macklem, who took over as Bank of Canada governor in June, is making inequality the focus of policy, as Powell in the United States and Christine Lagarde at the European Central Bank have also done. On Feb. 23, Macklem made it clear that he intends to let the economy run hotter for longer than most mainstream economists would have thought safe only a few years ago, reinforcing both the likelihood that interest rates will remain extremely low for at least another couple of years and that more people will potentially get to participate in the recovery.
Over the past year Federal Reserve Chair Jerome Powell has engineered the largest economic rescue in U.S. history, thrown a controversial lifeline to companies hard hit by the coronavirus pandemic and steered a sweeping labour-friendly revamp of monetary policy that any presidential administration would welcome.
Asked by students at Durham University when interest rates might return to the level of 4% to 5% common before the financial crisis, Vlieghe replied: “Maybe not in my lifetime.”
Draghi, one of Europe’s most highly regarded public officials, was unexpectedly called in by Mattarella earlier this month after the previous coalition collapsed in the middle of the latest pandemic wave.
The sudden revision surprised economists, causing some to question whether Statscan had an accurate picture of inflation. The change was made amid growing concern about higher-than-expected inflation, which is driving bond yields up and sending jitters through the market.
When Guideline B-20 revisions were introduced, lenders made changes that reduced the proportion of mortgages approved for the most highly indebted or over-leveraged borrowers (e.g. mortgage loans that exceed 450% of a borrower’s income.)
The contribution from government development bank the Japan International Cooperation Agency will support efforts to improve African countries’ economic resilience at a time when many are struggling with the coronavirus pandemic, the AfDB said in a statement.
Hedge fund managers, professional investors and specialists in the more arcane corners of trade processing are clearing their diaries and checking popcorn supplies for a session that could determine how regulators deal with an explosion in trading by amateurs for years to come.
In a time of global crisis, the persistent excess savings of the Asian nations need to be drawn down to help stimulate global growth — otherwise why were they accumulating these reserves other than for “beggar thy neighbour” purposes?
Speakers include Robinhood CEO Vladâ¯Tenev, hedge fund Citadel CEO Kenneth Griffin,â¯Reddit CEO and co-founder Steve Huffman, Melvin Capital CEO Gabrielâ¯Plotkin, and day trader Keith Gill, who is credited with rallying the retail interest in GameStop through Reddit forum WallStreetBets.
A top Bank of Canada official called the recent spike in cryptocurrency prices “speculative mania,” and said such assets don’t have the qualities to become the money of the future.
WSJ - Josh Mitchell and Eliza Collins (2021-02-05)
The Biden administration is considering using executive action to forgive Americans’ federal student debt, the White House’s chief spokeswoman said Thursday, responding to pressure from Democratic lawmakers and progressive groups.
The federal government has directed the Canada Infrastructure Bank to invest at least $1-billion in revenue-generating projects that benefit Indigenous peoples as part of a new statement of priorities for the Crown corporation.
Bank of Canada deputy governor Lawrence Schembri is expecting little change to the central bank’s current inflation targeting regime, even as it examines alternative monetary policy targets, including a potential “dual mandate” that would put a more explicit focus on employment.
Businesses can qualify for between $25,000 and $1 million if they meet the eligibility requirements, the main one being that they must show their revenues have fallen by at least 50 per cent for at least three months out of the previous eight.
A major tax battle between the Canada Revenue Agency and the country’s six biggest banks has more than doubled in size over the past few years, with the lenders saying they are being reassessed for in excess of $6 billion due to a disagreement over dividends.
Bitcoin is "more of a speculative asset than money" that should perhaps "be seen more like a community of online gamers, who exchange real money for items that only exist in cyber space," says Carstens in a speech on digital currencies to the Hoover Institute.
Central bankers around the world are ramping up research into digital currencies, according to the Bank of International Settlements, even as cryptocurrencies such as bitcoin are likely to remain niche products with little use as payment methods.
The federally backed loan can be used for rent, utilities and help with payroll, among other costs, to keep operations running through public health restrictions, but can’t be used to pay or refinance existing loans.
The government has outlined far reaching proposals to strengthen the international competitiveness of the UK’s £9.9tn asset management industry with tax reforms and innovative fund structures, providing a road map for the sector’s future outside of the EU.
Australia’s securities regulator said on Monday there was a cyber security breach at a server it used to transfer files including credit licence applications where some information may have been viewed.
Among other things, the task force called for a restructuring of the Ontario Securities Commission (OSC), including spinning out its adjudicative function, separating the chair and CEO roles, expanding its mandate to include promoting growth and even changing its name — to the Ontario Capital Markets Authority.
Set up in 2019 the BIS Innovation Hub has centres in Switzerland, Hong Kong and Singapore, with locations in Toronto, London, Frankfurt and Paris, and Stockholm on the horizon.
The centre will shape and steer the ECB’s climate agenda internally and externally, building on the expertise of all teams already working on climate-related topics. Its activities will be organised in workstreams, ranging from monetary policy to prudential functions, and supported by staff that have data and climate change expertise.
A W-shaped recovery from the COVID-19 pandemic could trigger a nearly 50 per cent drop in housing prices and a peak unemployment rate of 25 per cent, if the government doesn’t offer relief, says the Canadian Mortgage and Housing Corporation.
To be sure, these are future considerations. There won’t be any talk of higher interest rates when the Bank of Canada’s leaders conclude their latest round of policy deliberations on Jan. 20. The most pressing concerns for the central bank at this stage are whether a grim winter will cripple the recovery, and when to slow its multi-billion-dollar bond-purchase program, which could create asset-price bubbles if left in place too long.
The Bank of England said on Wednesday the aim of its banking stress test this year is to check if banks can continue helping the economy during the pandemic and if a return to more normal levels of dividends is possible.
Janet Yellen made the case for another sweeping economic aid package at her hearing to be the next U.S. Treasury secretary Tuesday, pushing back against Republican skepticism of the need for more deficit spending to bolster the recovery.
Foreign investors added $11.8 billion worth of Canadian securities during the month, “largely purchases of federal government debt,” the agency said Monday. Canadian investors acquired $7.6 billion of foreign securities, led by U.S. equities.
The concerns were laid out in a memorandum addressed to then-finance minister Bill Morneau from his deputy in early 2020. The document, which was recently obtained by the Post via access-to-information request, explored the drivers of rising numbers of consumer insolvencies.
Few economists and market analysts expect the central bank to trim its overnight target rate on Wednesday. But they say the possibility can’t be ruled out as the bank tries to balance the near-term pain of lock-downs against better-than-expected vaccine news and robust fiscal stimulus.
Investment Executive - Christopher Rugaber (2021-01-15)
During an online discussion hosted by Princeton University, from which Powell earned his undergraduate degree, the Fed chair said the recovery of the economy from the pandemic recession “is far from our goals.” The Fed had said after its last policy meeting last month that it would continue to buy $120 billion in bonds each month until the economy made “substantial further progress” toward the Fed’s goals of maximum employment and stable 2% inflation.
Joe Biden pleaded for Congress to “act now” on a new $1.9tn economic rescue plan, setting it up as his top legislative priority as he prepares to enter the White House next week.
Boosting Canada’s long-term economic growth by reducing interprovincial trade barriers and introducing programs such as universal daycare may be the best way to manage ballooning federal and provincial government debt, former Bank of Canada governor Stephen Poloz says.
Investment Executive - Martin Crutsinger (2021-01-14)
The U.S. government’s deficit in the first three months of the budget year was a record-breaking $572.9 billion, 60.7% higher than the same period a year ago, as spending to deal with the Covid-19 pandemic pushed outlays up while revenue declined. (All figures are in U.S. dollars.)
China plans to push tech giants including Ant Group, Tencent and JD.com to share consumer loan data to prevent excess borrowing and fraud, two people with knowledge of the matter said, in Beijing’s latest tightening of scrutiny.
U.S. President Donald Trump on Tuesday (January 5) signed an executive order banning transactions with eight Chinese software applications, including WeChat Pay and Alipay. Gloria Tso reports.
The world’s biggest economies shouldering record debt burdens are about to confront an unwelcome legacy of the financial crisis: a $13 trillion debt bill.
Reuters - Neil Unmack, Anna Szymanski (2021-01-04)
Central bankers will spend 2021 trying to tame the debt monsters they made in 2020. The pandemic-induced market meltdown forced Federal Reserve Chair Jay Powell to buy corporate debt for the first time, while European Central Bank President Christine Lagarde unveiled plans to spend an unprecedented 1.85 trillion euros propping up markets. Yet in helping resolve the crisis, rate-setters sowed the seeds of the next one.
Ontario Finance Minister Rod Phillips stepped down from the position amid public outrage that he was vacationing in the Caribbean over the holidays, despite travel restrictions.
Britain and the European Union signed a Brexit trade deal late on Thursday, preserving several trade provisions for both sides and limiting the scale of disruption resulting from the divorce.
“With this announcement, our government will ensure Canadian businesses that trade goods with the United Kingdom continue to have preferential access,” Freeland said in a statement.
FP - Erik Wasson, Laura Litvan and Billy House (2020-12-23)
The Senate followed the House late Monday in passing by overwhelming margins the US$2.3 trillion bill, just hours after lawmakers got their first look at the 5,593 pages of text. The White House has said President Donald Trump will sign it.
“I still have a picture, I’ll go get it afterwards,” said Macklem, who was the Finance Department’s top international official at the time. “I keep this picture of the beginning of the meeting. I’m in the picture and I look terrible. I was pretty stressed. I keep that in my office as a little reminder of that feeling in the pit of your stomach.”
The Asian Infrastructure Investment Bank plays a useful role in burnishing China’s image, its president acknowledges, even as he warns that Canada would hurt itself by leaving an international institution that critics have called a tool of Beijing.
“We do have very low interest rates, and we have given extraordinary forward guidance,” Tiff Macklem, the current Bank of Canada governor, said in an exclusive year-end interview on Dec. 16. “That’s partly how monetary policy works. It stimulates, lowers the cost of credit, so you’re probably going to see more spending on things that people use credit for. Housing would be high on that list.”
In the end, the dollar played only a minor role in the Poloz story. He devoted a speech to the subject in 2014, but the currency rarely featured in interest-rate discussions. In his final interview as governor last May, Poloz said he thought that he had been unfairly tagged as being “soft on the dollar,” when all he was doing was trying to keep deflationary forces at bay.
Bloomberg - Saleha Mohsin and Liz McCormick (2020-12-21)
The greenback’s tumble this year -- it’s heading for the second-biggest drop in the past decade and a half -- has already stoked foreign policy makers’ concerns, thanks to the competitive advantage it gives the U.S. Even a tacit endorsement of a weakening dollar could spur tensions with trading partners.
The Bank of Canada may be forced to wind down its bond purchases next year because its holdings are getting too large, but don’t expect the move to drive up domestic borrowing costs.
A QE taper likely won’t lead to “severe” tightening of financial conditions, particularly if other larger central banks maintain their bond-purchasing volumes, the
G&M - GUY FAULCONBRIDGE AND KATE HOLTON (2020-12-18)
British Prime Minister Boris Johnson’s office said on Thursday that trade talks with the European Union were in a “serious situation” and that no agreement would be reached unless the bloc changed its position substantially.
OSFI hosted the 2020 Risk Management Webcast for Deposit-Taking Institution on November 23, 2020. Please click the timestamps below to jump to specific topics in the video:
G&M - HOWARD SCHNEIDER, ANN SAPHIR AND JONNELLE MARTE (2020-12-17)
“The parts of the economy that are weak are the service-sector businesses that involve close contact,” such as restaurants and the travel industry, Powell said in a news conference following the two-day policy meeting.
“Near term, rising COVID-19 infections will dampen growth and could even deepen our economic hole,” Mr. Macklem said in a speech via video-conference Tuesday to the Greater Vancouver Board of Trade.
Some experts believe the Bank of Canada and its counterparts in the United States and Europe have embarked on a course of debt monetization as their economies lurch from crisis to crisis. And they worry that domestic politics will make it very hard to reverse course.
“I really encourage governments around the world that have got massive deficits to really consider at this point privatizing, you know, selling operating brownfield infrastructure assets, if they can, because they’re going to get extraordinary prices for it, given the wall of money that’s interested in it, and it will help (bring down) deficits.”
In the end, the guard-rails mostly held. The Fed on Wednesday concludes the last Federal Open Market Committee meeting with Trump in the White House. The bank has avoided the sort of reputational damage suffered by many federal agencies, like the Centers for Disease Control or the Environmental Protection Agency, where politics seemed to gain a foothold over technical expertise and original mission.
Economists say the Fed may deliver fresh guidance on its asset purchases, now $120 billion a month, tying how long the buying will continue to substantial progress in meeting its goals of full employment and 2% inflation. That would be a stronger commitment than the existing pledge to maintain purchases “over coming months.”
When members of the Federal Open Market Committee convene for their final meeting of the year on Tuesday and Wednesday, the fate of the US central bank’s asset purchase programme will be in focus.
G&M - JAN STRUPCZEWSKI AND KATE ABNETT (2020-12-11)
European Union leaders unblocked on Thursday a 1.8 trillion euro financial package to help the economy recover from the pandemic-induced recession after reaching a compromise with Poland and Hungary, the chairman of EU leaders Charles Michel said.
The Bank of England took steps on Friday to keep banks lending through 2021 as Britain grapples with the COVID-19 pandemic and braces for any market disruption from a big change in the UK’s trading relationship with the European Union.
The central bank has purchased a little more than $180 billion in Government of Canada bonds since March as part of its quantitative easing, or QE, program. Over the same period, the federal government has rolled out a slew of spending programs to support businesses and consumers amid job losses tied to the Covid-19 pandemic.
Before the U.S., only five powers had enjoyed the coveted “reserve currency” status, going back to the mid-1400s: Portugal, then Spain, the Netherlands, France and Britain. Those reigns lasted 94 years on average. At the start of 2020, the dollar’s run had endured 100 years. That would have been reason to question how much longer it could continue, but for one caveat: the lack of a successor.
Governor Tiff Macklem and his deputies on the Governing Council made explicit mention of the exchange rate for the second consecutive time while updating their interest-rate stance, a signal that the dollar’s recent strength could reduce what Canada might otherwise expect to earn from exports.
The Bank of Canada today maintained its target for the overnight rate at the effective lower bound of ¼ percent, with the Bank Rate at ½ percent and the deposit rate at ¼ percent. The Bank is maintaining its extraordinary forward guidance, reinforced and supplemented by its quantitative easing (QE) program, which continues at its current pace of at least $4 billion per week.
The Bank of Canada has now officially said it could potentially drop the benchmark interest rate below its current setting of 0.25 per cent, while emphasizing that it remains deeply skeptical of negative interest rates.
The bill is part of the National Defense Authorization Act, the annual omnibus defence bill that passed in the House of Representatives by a veto-proof margin, which means that neither the sitting nor future president can overrule it. The Senate is expected to follow.
Bank of Canada deputy governor Paul Beaudry used a key speech Thursday to defend the central bank’s quantitative easing program, seeking to dispel the notion that it is printing money to finance the federal government’s huge deficit.
“Canada’s recently released medium-term financial roadmap reinforces the likelihood of a rising public debt burden and expansionary fiscal policy without precise details of a return to a fiscal anchor and consolidation,” Fitch Ratings said in an article posted on its website on Monday.
Economists predict the central bank will restate a pledge to hold its overnight interest rate at 0.25% until at least 2023, while continuing bond purchases at the current pace of C$4 billion ($3.1 billion) per week. The bank releases its December policy decision at 10 a.m. in Ottawa.
China’s yuan weakened minutes before Wednesday’s official close, reversing an earlier gain that had pushed the currency to its strongest level in more than two years.
Bloomberg - Theophilos Argitis and Kait Bolongaro (2020-12-08)
Michael Sabia, a big-name corporate leader who has run the nation’s largest phone company and second-largest pension fund, was appointed deputy minister of finance Monday. The move formalizes the role he’s played since the early days of the pandemic as a top adviser to both Trudeau and his finance minister, Chrystia Freeland.
It also illustrates the extent to which an ambitious fiscal agenda has prevailed in Trudeau’s administration. Sabia has called for spending taps to remain open and isn’t too worried about higher debt. His ambitions are to reshape the economy after the pandemic, in line with the prime minister’s plan to put the state at the center of any recovery.
“If I had a choice between dealing with the deficit of weak infrastructure, or the deficit of a digital divide, or the deficit of significant social inequality, those are all deficits that matter and I think addressing those right now is at least as important as managing our fiscal situation,” Sabia said in a September interview with TVOntario.
Brexit and the coronavirus pandemic have reinforced the need to solidify the single currency’s foundations, said the president of the Eurogroup of finance ministers, who will seek to revive the bloc’s long-stalled banking union project this week.
Canada’s banking regulator has chosen to leave a key threshold for large banks’ capital reserves unchanged, even as it warned that the country’s financial system still has vulnerabilities and faces uncertainty amid the coronavirus pandemic.
Canadian Underwriter - David Gambrill (2020-12-07)
Canada’s solvency regulator has come out with a softer version of its proposed rule regarding the property and casualty insurance industry’s issuance of high-limit policies.
Decisions on the calibration of the buffer are based on OSFI supervisory judgement, informed by its monitoring and analytical work on a range of vulnerabilities, and are made in consultation with OSFI's federal financial regulatory partners.
The fiscal update does not say by how much each dollar of government spending increases GDP but during the pandemic it must be low. Household incomes rose by 13 per cent during the downturn, more than in any other OECD country (even the U.S. during its election year). But despite all this new money, households did not spend more. Instead, our household saving rate jumped by 23 per cent of personal disposable income, more than in any other country. The update spins this embarrassing fact by saying Canadians were getting a “down payment” now to spend later.
The largest U.S. bank lobby group is spending $1 million on television ads to boost Republican Senator David Perdue, in a bid to ensure the Senate remains in Republican hands after Georgia runoffs in January, according to federal filings.
