Tausi Insider

Bank of Canada governor Tiff Macklem said that unemployment needs to rise in order to slow down inflation, although elevated levels of job vacancies could soften the blow. In a speech in Toronto hosted by the Public Policy Forum, Mr. Macklem said that Canada’s labour market is overheating, with unemployment near a record low and businesses struggling to find workers. This is feeding through into inflation, as companies bid up wages to compete for employees. “We need to rebalance the labour market,” Mr. Macklem said. “This will be a difficult adjustment. We want to do this in the best way possible for Canadian workers and businesses.” Mr. Macklem’s comments come on the heels of a blowout jobs report last Friday. Employment jumped by 108,000 in October, recouping all of the jobs lost during the summer slowdown. Average hourly wages were up 5.6 per cent that month compared to the previous year, while the rate of unemployment remained steady at 5.2 per cent as work force participation ro...

Bank of Canada governor Tiff Macklem said that unemployment needs to rise in order to slow down inflation, although elevated levels of job vacancies could soften the blow. In a speech in Toronto hosted by the Public policy forum, Mr. Macklem said that Canada’s labour market is overheating. This is feeding through into inflation, as companies bid up wages to compete for employees. “We need to rebalance the labour market,” Mr. Macklem said. “This will be a difficult adjustment. We want to do this in the best way possible for Canadian workers and businesses.” Mr. Macklem’s comments come on the heels of a blowout jobs report last Friday. Employment jumped by 108,000 in October, recouping all of the jobs lost during the summer slowdown. Average hourly wages were up 5.6 per cent that month compared to the previous year, while the rate of unemployment remained steady at 5.2 per cent as work force participation rose. The strength of the labour market is a challenge for the central bank. Mr. ...

The lowest advertised uninsured fixed rates in Canada mostly climbed this week, by four to eight basis points. Joe Raedle/Getty Images The lowest advertised uninsured fixed mortgage rates in Canada mostly climbed this week, by four to eight basis points. Popular two-year fixed rates, which attract people who want to lock in for a few years and refinance when the Bank of Canada cuts rates, jumped 22 bps. As for the lowest insured fixed rates, they mainly held steady. The exception was one-year and two-year terms, where Quest Mortgage launched new market-leading offers of 4.99 per cent. Variable rates didn’t move this week. They will remain steady until the central bank presumably increases interest rates again on Dec. 7 and pushes some borrowers closer to their trigger rate. Last, but not least, are rates for home equity lines of credit, where Tangerine finally pulled its stellar offer of prime rate minus 0.1 per cent, which it has featured since 2019. The lowest-cost widely advertise...

Some Canadian employers say they plan to hold onto their workers even if the economy slips into a recession rather than risk not be able to rehire later, which should put a lid on job losses and soften the economic blow of the slump. Canada’s jobless rate dropped to a record low of 4.9% over the summer and has since edged up to 5.2%. In October, the economy added a net 108,300 jobs, and wages growth climbed to 5.5%, even as the economy began to stall. The challenge of hiring over the last few months is giving employers pause. “I don’t anticipate layoffs at all,” said Mark Seymour, CEO of trucking service Kriska Transportation Group in Prescott, Ontario. Up until a few months ago, Kriska’s 1,200 employees were too few to keep up with demand, Seymour said. Now trucking activity, a leading indicator, has fallen off about 5% from earlier this year, Seymour told Reuters. Seymour said his company hauls for one major car manufacturer who is expecting to be able to boost production again soo...

Bank of Canada governor Tiff Macklem says rising interest rates will slow spending which will have an effect on employment rates. Macklem says the labour market right now is unsustainably tight and needs to rebalance but he does not expect the level of job losses seen in past economic downturns. The Canadian Press https://www.tausiinsider.com/video-jobs-market-needs-rebalance-to-rein-in-inflation-macklem-says/?feed_id=427294&_unique_id=649b11e2561a4

Parliamentary Budget Officer Yves Giroux's office decided to crunch the numbers to estimate what would happen if the Bank of Canada overstepped with its rate increases. Dave Chan/Tausi Insider After six interest rate increases totalling 3.5 percentage points – and with the promise of still more to come – there’s a growing urgency to the questions the Bank of Canada faces about its aggressive pursuit to snuff out inflation. How high is the central bank willing to go? How far is too far? And how much economic collateral damage might the bank inflict if its policy tips into overzealousness? With the question becoming an increasing preoccupation of Ottawa policy makers and a broad swath of the Canadian public, the Office of the Parliamentary Budget Officer decided to crunch the numbers to estimate what would happen if the Bank of Canada overstepped with its rate increases. Predictably, it’s not good. Arguably, it might be tolerable. But surprisingly, it might not make much difference...

Canadians have been slow to turn away from variable-rate mortgages despite a slew of central bank interest rate hikes since March. It’s an unusual trend that mortgage brokers chalk up to economic uncertainty, regulations and – for some borrowers – a need for flexibility. As of August, variable-rate mortgages still accounted for 44 per cent of new mortgages, mortgage renewals and mortgage refinances, according to an October briefing by housing analyst Ben Rabidoux for Mortgage Professionals Canada, the country’s national mortgage broker industry association. What is your mortgage trigger rate? This calculator helps you estimate it Calculator: See how rising interest rates will affect the cost of your mortgage That share was down from a January peak of 57 per cent but still twice as high as levels seen before the pandemic, according to the report. And even after two more rate increases by the Bank of Canada, in September and October, some mortgage professionals report a significant sha...

Prime Minister Justin Trudeau and Deputy Prime Minister and Minister of Finance Chrystia Freeland in the House of Commons on Parliament Hill in Ottawa, on Nov. 3. Justin Tang/The Canadian Press John H. Cochrane is a senior fellow of the Hoover Institution at Stanford University and author of The Fiscal Theory of the Price Level , available January, 2023. Jon Hartley is a PhD student in economics at Stanford University and a research fellow at the Foundation for Research on Equal Opportunity. The most important source of Canada’s inflation is simple: Starting in 2020, the government borrowed more than $700-billion, and mostly handed it out. People spent it, driving up prices. It was, of course, proper for the government to help people and businesses gravely hurt during the COVID-19 pandemic. And debts and deficits do not automatically cause inflation – Canada can borrow an immense amount without an impact on the price level if the government has a believable plan for repayment. But t...

Canada’s housing downturn decelerated in October, with home sales rising slightly and prices levelling out. But the volume of activity was depressed and economists warned that home prices would continue to fall as borrowing costs soar. The number of resales rose 1.3 per cent from September to October, according to the Canadian Real Estate Association (CREA). That was the first rise in monthly sales since February, when Canada’s central bank was about to embark on its campaign to slash the supply of cheap money. At the same time, the national home price index fell 1.2 per cent to $777,200 from September to October after removing seasonal influences, according to CREA. That was the smallest monthly drop since June, though the eighth consecutive month of price declines. Over all, October’s activity was 15 per cent below the prepandemic monthly average. Bank of Montreal senior economist Robert Kavcic described the Canadian housing market as depressed and forecast further price decreases ...

Brookfield Asset Management Inc.’s renewables affiliate is committing to invest up to US$700-million in a newly formed U.S. recycling business, targeting recycled materials as part of the push to cut global carbon emissions. Brookfield Renewable Partners LP has invested an initial US$200-million for a minority stake in Circular Services, a new company that is majority owned and managed by New York-based investment firm Closed Loop Partners. Brookfield Renewable is also committing to invest another US$500-million to help Circular Services grow. The investment is being made through the US$15-billion Brookfield Global Transition Fund, which is co-led by vice chair and former Bank of Canada governor Mark Carney and Brookfield Renewable CEO Connor Teskey. It is Brookfield’s first fund focused on investments intended to help speed the transition to a net-zero economy. Circular Services owns and operates a dozen municipal recycling facilities in the United States. And it has large municipa...

A motorist fills up his truck with gas in Toronto. Christopher Katsarov/The Canadian Press Canada’s inflation rate held steady in October after slowing for three months, increasing the likelihood that the Bank of Canada will raise interest rates again in December. The Consumer Price Index rose 6.9 per cent in October from a year earlier, matching the inflation rate in September, Statistics Canada said in a report on Wednesday. The result was in line with analyst expectations. On a monthly basis, consumer prices rose 0.7 per cent – just shy of the 0.8-per-cent increase that Bay Street analysts had predicted. After hitting a near-four-decade high of 8.1 per cent in June, the annual inflation rate has eased somewhat, largely because gasoline prices have fallen from record highs seen in the aftermath of Russia’s invasion of Ukraine. Related: Higher TFSA contribution limit and lower taxes are among the rare upsides of high inflation But that dynamic shifted again in October. Gas prices ju...

The cost of commuting is forcing some Ontario residents who moved outside the GTA during the pandemic to reconsider their place of residence as employers call workers back to the office. LARS HAGBERG/THE CANADIAN PRESS The Canadian Press Getting caught up on a week that got away? Here’s your weekly digest of The Globe’s most essential business and investing stories, with insights and analysis from the pros, stock tips, portfolio strategies and more. Is the cost of long work commutes worth it? When remote work took off during the pandemic, housing markets surrounding the Greater Toronto Area became increasingly popular for homebuyers priced out of the region. But as workers are being called back to the office – even just for a few days a week – those who moved out of town are learning that their commutes are increasingly long and expensive. As Salmaan Farooqui reports, one woman who bought a home in Belleville now spends $600 a month to travel to her Toronto-based finance job three ti...

Bank of Canada senior deputy governor Carolyn Rogers takes part in a news conference in Ottawa, on Oct. 26. PATRICK DOYLE/Reuters Recent homebuyers with variable-rate mortgages will find the adjustment to higher interest rates more painful, said Bank of Canada senior deputy governor Carolyn Rogers. Speaking before the networking group Young Canadians in Finance in Ottawa Tuesday, the senior deputy governor said the share of households with a variable-rate mortgage has increased over the last year. These mortgage holders are especially affected by interest rate hikes. “Mortgage costs for some Canadians have already increased, and they will likely increase for others in time,” Rogers said, according to her prepared remarks. Housing activity boomed during the pandemic as Canadians rushed to take advantage of low interest rates. Now, as interest rates climb back up, recent homebuyers with variable-rate mortgages are seeing their borrowing costs go up. New research from the Bank of Canada...

Homes on Sherman Brock Circle in Newmarket, Ont. on Mar 30, 2021. Fred Lum/the Globe and Mail Canada’s financial system should be able to weather a period of heightened stress, but many recent home buyers could experience a “painful” squeeze as interest rates continue to rise, the Bank of Canada’s second-in-command said Tuesday. In a speech in Ottawa, senior deputy governor Carolyn Rogers said long-standing vulnerabilities in Canada’s housing market worsened through the COVID-19 pandemic as home prices soared and buyers increasingly relied on variable-rate mortgages, which are linked to the central bank’s benchmark lending rate. Now that interest rates are rising and home prices are falling, many of these home buyers are experiencing a nasty adjustment, Ms. Rogers said. The most common variable-rate product has fixed monthly payments. With every interest rate hike, more of the borrower’s monthly payment goes toward interest. However, when the monthly payment no longer covers any prin...

Provinces peppering the public with cash to deal with soaring prices compounds inflation rather than easing it, economists say. They say the tactic used by Alberta this week and B.C. and Quebec earlier this year fails to quell inflation because having extra money means people will continue spending and demand for products and service will stay high, keeping decades-high inflation from budging. If people had less money to spend while prices were high it would weigh on inflation, they say. Inflation sat at 6.9 per cent last month down from 8.1 per cent in June. Giving money to households is “likely to contribute to the problem as opposed to solving it,” said Travis Shaw, senior vice-president of public finance at DBRS Morningstar. “It does contradict what the Bank of Canada is trying to do with monetary policy in terms of trying to take some heat out of the system and ultimately bring down inflation,” he said. His remarks come a day after Alberta Premier Danielle Smith announced her In...