Skip to main content

Canada's central bank signals the end of high rates.

 Canada's cent­ral bank has raised interest rates to their highest level since 2007 but sig­nalled a likely

Toronto

pause in its tight­en­ing cycle after it said it saw signs that the eco­nomy had cooled down. The Bank of Canada lif­ted its overnight rate 0.25 per­cent­age points to 4.5 per cent yes­ter­day, mark­ing the eighth con­sec­ut­ive meet­ing at which it has raised bench­mark bor­row­ing costs. In Janu­ary last year, interest rates were 0.25 per cent, where they had been since the start of the pan­demic in March 2020. The BoC was the first cent­ral bank in a G10 eco­nomy to hint that it was ready to pause its tight­en­ing cycle, not­ing in Decem­ber that there had been a slow­down in domestic demand.

Mem­bers of the US Fed­eral Reserve and the European Cent­ral Bank have so far indic­ated that they will "stay the course" and con­tinue to raise rates to tamp infla­tion. ""Eco­nomic growth has been stronger than expec­ted and the eco­nomy remains in excess demand . A major­ity of eco­nom­ists polled by Refin­itiv expec­ted the BoC to enact a quarter-point raise. Fifty-five per cent of the eco­nom­ists polled expec­ted the bank to pause its mon­et­ary tight­en­ing for the remainder of 2023, while the remainder expec­ted it to lower the overnight rate later in the year.

In Decem­ber, Canada's head­line infla­tion rate fell to 6.3 per cent, down from a 6.8 per cent annual pace in Novem­ber. The price of pet­rol and dur­able goods have declined while gro­cery costs con­tinue to increase. "Infla­tion is pro­jec­ted to come down sig­ni­fic­antly this year," the BoC said. The cent­ral bank will keep a close eye on Canada's labour mar­ket, which has held up as bor­row­ing costs have risen.

The eco­nomy added 104,000 jobs in Decem­ber, smash­ing expect­a­tions for a mod­est 5,000 addi­tions.

www.sba.tax

Labels:

Comments

  1. William26 January 2023 at 10:30

    The huge addition of jobs (compared to expectations) made this possible and that's one of the main reasons the economy is doing better.

    ReplyDelete
    Replies
    1. Simone26 January 2023 at 13:10

      High rates should stop from now on. Prices should continue to go down on almost all goods throughout the year. I wonder what happened that led to that excess in jobs?

      Delete

Post a Comment

Cloud Bookkeeping

HS2 cost cuts new routes and add delays.

 Trans­port depart­ment offi­cials have begun work on «Project Sil­ver­light» sug­gest­ing the high­speed rail scheme might face four addi­tional years of delay. The planned High Speed 2 rail line faces fur­ther delays of up to four years and more cuts to the project under plans being drawn up by min­is­ters to rein in its bal­loon­ing costs. The extra delays to the coun­try’s biggest infra­struc­ture project would mean that it would not be com­pleted until as late as 2045 — 12 years after ori­gin­ally planned. «This is a func­tion of infla­tion; we are hav­ing to find huge sav­ings because the cost of everything the depart­ment is already doing will have become so much more expens­ive by then,» said one gov­ern­ment offi­cial. In Octo­ber, the FT repor­ted that the Treas­ury had asked HS2’s man­age­ment team to identify poten­tial cuts or «scope reduc­tions» to the high-speed line. Trans­port depart­ment offi­cials have sub­sequently begun work on Project Sil­ver­light aimed at fi...
4 comments
Read more

Doubt on CS's collateral.

  Credit Suisse provided an emergency $140mn loan to Greensill Capital based partly on invoices to companies that deny ever doing the business stated on the documents. The Swiss bank provided the loan in October 2020, less than five months before the collapse of Greensill, a supply chain finance firm that counted former British prime minister David Cameron as a senior adviser. Invoices issued by metals magnate Sanjeev Gupta’s Liberty Commodities and sold to Greensill formed part of the collateral for the loan, according to documents seen by the Financial Times and people familiar with the transaction. Yet several of the parties named on the invoices have told the FT they did no business with Liberty. GFG has consistently denied any wrongdoing. Credit Suisse’s loan had a clause dictating that the collateral value had to be equal to or greater than the $140mn borrowed. The terms of the debt agreement only allowed invoices on Green-sill’s balance sheet to count towards this tally if t...
2 comments
Read more

Small business will be excluded from fraud law.

  Min­is­ters are plan­ning to exclude small busi­nesses from anti-fraud legis­la­tion by nar­row­ing the scope of a crim­inal offence tar­get­ing com­pan­ies that fail to pre­vent eco­nomic crimes. MPs and anti-cor­rup­tion cam­paign­ers had hoped the gov­ern­ment would seek to amend the eco­nomic crime and cor­por­ate trans­par­ency bill to ensure the new offence covered all com­pan­ies. The plans to limit the scope of the amend­ments will also dis­ap­point those who had hoped the legis­la­tion would remove key hurdles to the pro­sec­u­tion of white-col­lar crime. A new «fail­ure to pre­vent» offence for fraud would bring it in line with exist­ing sim­ilar cor­por­ate offences for bribery and tax eva­sion. At present, pro­sec­utors need only prove that organ­isa­tions lacked «reas­on­able» or «adequate» con­trols to pur­sue the offence in bribery and tax eva­sion cases. «It would be much more sens­ible for the gov­ern­ment to provide strong guid­ance for SMEs on what these pro­ce...
3 comments
Read more