Tausi Insider

The U.S. Federal Reserve may consider slowing the pace of rate increases at its next meeting but that should not be seen as a “softening” in its commitment to lower inflation, Federal Reserve Gov. Christopher Waller said on Sunday. Markets should now pay attention to the “endpoint” of rate increases, not the pace of each move, and that endpoint is likely still “a ways off,” Waller said in response to a series of questions on monetary policy at an economic conference organized by UBS in Australia. “It depends on inflation.” “We’re at a point we can start thinking maybe of going to a slower pace,” Waller said, but “we’re not softening...Quit paying attention to the pace and start paying attention to where the endpoint is going to be. Until we get inflation down, that endpoint is still a ways out there.” A report released last week showing slower than expected inflation in October was “good news,” but was “just one data point” that would have to be followed with other similar readings t...

The European Central Bank building, in Frankfurt, Germany, on July 21. WOLFGANG RATTAY/Reuters 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. The ECB has raised rates by a combined 200 basis points since July, its fastest pace of tightening on record, and market pricing suggests it is just over halfway done with the next move in the form of a 50– or 75-basis-point hike coming in December. Fabio Panetta, a member of the ECB’s board, argued that excessive hikes could deepen a downturn as policy tightening is already set to cut more than one percentage point from GDP growth each year until 2024. “If we were to compress demand in an excessive and persistent manner, we would face the risk of also pushing output permanently below trend,” Panetta said in a speech in Florence. “For as long...

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. In the budget, the government announced it would establish a permanent Council of Economic Advisors. This body of top economic experts would be there to provide sage counsel on how to shape policy to best navigate the current murky waters, and chart a course for future prosperity. It promised details about the council’s composition “in the coming months.” But nearly eight months later, the promised council isn’t helping find those answers. The government hasn’t even found its council yet. The Liberals have been all but silent about the plan since trumpeting it in the spring budget. There was no mention of it at all in the government’s fall economic statement this month. “Work is still very much ongoing,” Finance Department spokesperson Jessica Eritou assured me through an e-mail on Friday. But from the perspective of...

The Bank of Canada reported a $522-million third-quarter loss on Tuesday, the first time the central bank has lost money in its 87-year history. The bank has been caught in an unprofitable bind in recent months, as its dash to increase interest rates to fight inflation has created a mismatch between assets and liabilities on its enlarged balance sheet. It is now paying out a higher interest rate on roughly $200-billion worth of commercial bank deposits at the central bank than it is earning in interest on bonds that it owns. This led to a net-interest revenue loss of $350-million in the third quarter, down from $814-million net interest revenue the previous quarter. “The losses do not affect our ability to conduct monetary policy,” governor Tiff Macklem told the parliamentary finance committee last week. “I would also stress that our policy decisions are driven by our price and financial stability mandates. We do not make policy to maximize our income.” The losses may not impact the ...

Twitter will no longer enforce its policy against COVID-19 misinformation, raising concerns among public health experts that the change could have serious consequences if it discourages vaccination and other efforts to combat the still-spreading virus. Eagle-eyed users spotted the change Monday night, noting that a one-sentence update had been made to Twitter’s online rules: “Effective November 23, 2022, Twitter is no longer enforcing the COVID-19 misleading information policy.” By Tuesday, some Twitter accounts were testing the new boundaries and celebrating the platform’s hands-off approach, which comes after Twitter was purchased by Elon Musk. “This policy was used to silence people across the world who questioned the media narrative surrounding the virus and treatment options,” tweeted Dr. Simone Gold, a physician and leading purveyor of COVID-19 misinformation. “A win for free speech and medical freedom!” Twitter’s decision to no longer remove false claims about the safety of CO...

OPEC+ is likely to stick to its current oil output target when it meets on Sunday, two OPEC+ sources said on Friday, although some say a further output cut is not completely off the table given concern about economic growth and demand. The Organization of the Petroleum Exporting Countries (OPEC) and allies led by Russia, a group known as OPEC+, has switched its planned in-person meeting in Vienna on Dec. 4 to a virtual one, which sources in the group say signals the likelihood of it leaving policy unchanged. “It is unlikely there will be any change to the policy,” an OPEC+ source said. Another source made similar remarks, also declining to be identified by name. Talks begin on Saturday when OPEC ministers hold a virtual meeting at 1100 GMT. OPEC+ begins talks at the same time on Sunday with a meeting of the advisory Joint Ministerial Monitoring Committee (JMMC) panel, followed by the full ministerial conference. With oil prices and the economic outlook weakening, the group agreed in ...

A man walks at automaker General Motors (GM) Brightdrop unit's CAMI EV Assembly, Canada's first full-scale electric vehicle manufacturing plant, in Ingersoll, Ontario, Canada December 5, 2022. REUTERS/Carlos Osorio CARLOS OSORIO/Reuters Robert Asselin is senior vice-president of policy at the Business Council of Canada and former policy adviser to two prime ministers. When he became a presidential candidate back in 2019, Joe Biden made it unambiguously clear that his administration would pursue an aggressive industrial strategy to ensure U.S. competitiveness vis-à-vis China in key advanced industries and technologies. The recent adoption by Congress of the Inflation Reduction Act (IRA) and the CHIPS and Science Act – which received broad bipartisan support – are the manifest incarnations of his long-stated policy objective . For Canada, though, it is still searching for its own industrial strategy. As far back as August, 2020, I’ve written that Canada would be ill-advised t...

U.S. producer prices increased a bit more than expected in November, but the underlying trend in inflation is moderating, which could allow the Federal Reserve to slow its pace of interest rate hikes next week. The producer price index for final demand rose 0.3% last month, the Labor Department said on Friday. Data for October was revised higher to show the PPI gaining 0.3% instead of 0.2% as previously reported. In the 12 months through November, the PPI increased 7.4% after advancing 8.1% in October. Economists polled by Reuters had forecast the PPI climbing 0.2% and rising 7.2% year-on-year. The report came ahead of the Fed’s policy meeting next Tuesday and Wednesday. Fed Chair Jerome Powell said last month that the U.S. central bank could scale back the pace of its interest rate hikes “as soon as December.” The Fed is in the midst of the fastest rate-hiking cycle since the 1980s. Inflation is gradually slowing as supply chains ease and demand for goods ebbs. The Institute for Sup...

HSBC's decision to stop financing new oil and gas fields extends to infrastructure projects and oil- and gas-fired power plants across the bank's global operations, except for its Canadian unit, which is in the process of being sold to RBC. Duane Cole/Tausi Insider HSBC Bank Canada is not adopting its parent company’s sweeping move to cease financing for many oil and gas projects as Royal Bank of Canada RY-T works on closing a deal to acquire the London-based bank’s Canadian unit. HSBC Holdings is the latest bank to restrict financing for fossil-fuel industries as pressure mounts for lenders to ditch projects associated with climate-change risks. Weeks ago, RBC announced plans to acquire the bank’s Canadian division. HSBC announced Wednesday that it will stop financing new oil and gas fields, related infrastructure projects and oil- and gas-fired power plants. The policy extends across HSBC’s global footprint, with the exception of its Canadian unit. “During the sale process,...

HSBC's decision to stop financing new oil and gas fields extends to infrastructure projects and oil- and gas-fired power plants across the bank's global operations, except for its Canadian unit, which is in the process of being sold to RBC. Duane Cole/Tausi Insider HSBC Bank Canada is not adopting its parent company’s sweeping move to cease financing for many oil and gas projects as Royal Bank of Canada RY-T works on closing a deal to acquire the London-based bank’s Canadian unit. HSBC Holdings is the latest bank to restrict financing for fossil-fuel industries as pressure mounts for lenders to ditch projects associated with climate-change risks. Weeks ago, RBC announced plans to acquire the bank’s Canadian division. HSBC announced Wednesday that it will stop financing new oil and gas fields, related infrastructure projects and oil- and gas-fired power plants. The policy extends across HSBC’s global footprint, with the exception of its Canadian unit. “During the sale process,...

Employees work on the production line at a Beijing Benz Automotive Co factory, in Beijing. FLORENCE LO/Reuters China’s economy lost more steam in November as factory output slowed and retail sales extended declines, both missing forecasts and clocking their worst readings in six months, hobbled by surging COVID-19 cases and widespread virus curbs. The data suggested a further deterioration in economic conditions as lockdowns in many cities, a property-sector crunch and weakening global demand pointed to a bumpy road ahead even as Beijing ditched some of the world’s toughest anti-virus restrictions following widespread and rare public protests. Industrial output rose 2.2 per cent in November from a year earlier, missing expectations for a 3.6 per cent gain in a Reuters poll and slowing significantly from the 5.0 per cent growth seen in October, the National Bureau of Statistics (NBS) data showed on Thursday. It marked the slowest growth since May, partly due to disruptions in key manu...

The Canadian dollar CADUSD weakened against its U.S. counterpart on Thursday as tighter monetary policy globally weighed on investor sentiment and domestic data showed further weakening in the housing market. Shares fell globally after major central banks, including the Federal Reserve and the European Central Bank, delivered their final policy decisions of the year, with the Fed signaling it expected interest rates to stay higher for longer. Canada is a major producer of commodities, including oil, so the loonie tends to be sensitive to shifts in investor sentiment. U.S. crude oil futures were down 0.5 per cent at $76.89 a barrel, weighed by demand concerns. The Canadian dollar was trading 0.4 per cent lower at 1.3605 to the greenback, or 73.50 U.S. cents, after moving in a range of 1.3541 to 1.3632. Canadian home sales declined 3.3 per cent in November from October, data from the Canadian Real Estate Association showed on Thursday, while the national average selling price was down ...

Ottawa has announced sales targets for zero-emission vehicles, outlining proposed regulations that would make electric vehicles more readily available to Canadian consumers. DARRYL DYCK/Tausi Insider Ottawa has announced new sales mandates for zero-emission vehicles, saying the proposed regulations will make electric vehicles more available to consumers and help Canada hit its goal of reaching net-zero emissions by 2050. The federal government said on Wednesday that the regulations would require at least 20 per cent of new vehicles sold in Canada to be zero emission by 2026, at least 60 per cent by 2030 and 100 per cent by 2035. Environment Minister Steven Guilbeault had previously said that the government planned to introduce a zero-emission-vehicle (ZEV) mandate this year or next. Environmental and energy groups welcomed the news, with the Pembina Institute calling a sales mandate a game changer that would make electric vehicles more available and result in lower prices as manufact...

European Central Bank policy-makers Luis de Guindos and Yannis Stournaras on Thursday joined a chorus of euro zone central bankers supporting more euro zone interest rates increases at the pace of last week’s hike to tame inflation. The ECB raised its key interest rates by 50 basis points seven days ago and President Christine Lagarde signalled as many as two more hikes of the same magnitude after acknowledging that inflation would not to fall to the ECB’s 2 per cent target until the end of 2025. De Guindos, the ECB’s vice-president, said “increases of 50 basis points may become the new norm in the near term” and last for a “period of time” despite a shrinking economy. “If we do nothing, the situation would be worse because inflation is one of the factors behind the current recession,” he told French newspaper Le Monde. De Guindos also said he was concerned that markets could underestimate the persistence of inflation and that they might consider current easy fiscal policy to be inco...

Twitter Inc.’s public policy chief has left the company amid additional layoffs to the unit on Thursday, sources familiar with the matter told Reuters, as billionaire owner Elon Musk continues to slash costs. Sinead McSweeney, global vice president for public policy, has left Twitter, according to two sources. McSweeney’s departure has not been previously reported. The layoffs and departures of a high-ranking leader comes as regulators around the globe question Twitter’s content moderation work and protection of user data after Musk cut the staff from more than 7,000 to under 2,000. The public policy team is responsible for interacting with lawmakers and civil society on issues including free speech, privacy and online safety. It handles requests from governments and civil rights groups to remove problematic content and sets rules to protect vulnerable users. With fewer staff, backlogs could increase and some policies in development could be ignored, one of the sources said. Nick Pic...

The Bank of Canada building, in Ottawa, on May 31, 2022. Justin Tang/The Canadian Press 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. Ernie Daniels, David Dominy and Shelley Williams will join the 15-member board, which is made up of the bank’s governor, senior deputy governor, the deputy minister of finance and 12 independent directors. The board is not involved with setting interest rates or other aspects of monetary policy. That’s handled by the bank’s five-person governing council. But the board provides high-level oversight on issues such as accounting, strategic planning and risk management. Independent directors serve three-year renewable terms. Mr. Daniels is the president and chief executive officer of the First Nations Finance Authority. “To the best of our knowledge, Mr. Daniels is the first Firs...

The Bank of Canada's recently released third-quarter financial results showed that for the first time, the bank incurred a net loss of $511-million. Sean Kilpatrick/The Canadian Press Sonja Chen and Trevor Tombe are professors of economics at the University of Calgary. While the full effects of the Bank of Canada’s rate hikes are not yet known, there is an immediate effect on the central bank’s own finances: growing interest expenses and large financial losses. The bank’s recently released third-quarter financial results showed that for the first time, the bank incurred a net loss: $511-million. This is only the beginning. This matters, especially at a time of heightened political attention toward monetary-policy issues. The bank’s revenue is largely derived from its asset holdings, which mainly included Government of Canada bonds and treasury bills. Prior to the COVID-19 pandemic, these bond holdings cost the bank very little, and their returns normally exceeded bank expenses b...