The CD Howe Institute is urging the Bank of Canada (BoC) to sit tight on hiking interest rates and gradually start reducing them through the second half of next year..The consensus was rates need to start coming down, but not too quickly, it said in the latest communique Thursday from its Monetary Policy Council (MPC)..The Toronto-based think tank said higher mortgage rates are putting upward inflationary pressure on rents and having a negative impact on households, fuelled by rapid population growth and immigration..But with generous pandemic-related income supports having raised household saving, some members argued that consumers still had plenty of capacity to spend even as income growth moderates..Although the MPC plays no role in setting rates, its members make recommendations for the BoC’s upcoming interest rate announcement on Sept. 6, the subsequent announcement and the announcements six months and one year ahead..It’s recommending BoC Governor Tiff Macklem hold the overnight rate at 5% until at least March of next year and gradually start lowering them to 4.25% by September..Immigration and fiscal policy were also major themes in the panel’s deliberations, it said. .Although recent strong growth in temporary and permanent residents should increase Canada’s productive capacity over time, MPC members judged that rapid population growth is currently adding to inflationary pressure — since demand for housing and consumer goods and services precedes labour-force participation — while business investment and productivity are weak. .“With respect to fiscal policy, many members noted governments should be practicing more restraint at this point in the cycle,” it said, while worrying that ‘political pressures’ — an upcoming federal election — “might lead to more spending, which would add to inflationary pressure.”.Looking abroad, members noted the surprising recent strength of spending in the US – a support for Canadian exports – and weakness overseas, particularly in China which translates as a negative for both exports and commodity prices, such as oil..Back in Canada, many council members emphasized that while spending and activity are both moderating — reflected in lower overall inflation numbers — continued pressure on capacity put further progress towards broader targets in doubt..Canada’s inflation rate fell to 2.8% in July, the lowest in two years, but remains above the BoC’s 2% target. That helps explain why MPC members failed to recommend earlier, larger reductions in the overnight rate. .“Several commented that the Bank of Canada needed to be resolute in ensuring that inflation would continue to decline before lowering its policy rate,” it said..This is what the Western Standard is up againstThe Trudeau government is funding lies and propaganda by directly subsidizing the mainstream media. They do this to entrench the powerful Eastern, woke and corrupt interests that dominate the political, social and economic institutions in Canada. Federal authorities are constantly trying to censor us and stop us from publishing the stories that they don’t want you to read. Ottawa may weaponize our taxes and police against us, but we’ve got a powerful ally on our side.You. Free men, and free women. We need you to stand with us and become a member of the Western Standard. Here’s what you will get for your membership:Unlimited access to all articles from the Western Standard, Alberta Report, West Coast Standard, and Saskatchewan Standard, with no paywall. Our daily newsletter delivered to your inbox. .Access to exclusive Member-only WS events.Keep the West’s leading independent media voice strong and free.If you can, please support us with a monthly or annual membership. It takes just a moment to set up, and you will be making a big impact on keeping one the last independent media outlets in Canada free from Ottawa’s corrupting influence.
The CD Howe Institute is urging the Bank of Canada (BoC) to sit tight on hiking interest rates and gradually start reducing them through the second half of next year..The consensus was rates need to start coming down, but not too quickly, it said in the latest communique Thursday from its Monetary Policy Council (MPC)..The Toronto-based think tank said higher mortgage rates are putting upward inflationary pressure on rents and having a negative impact on households, fuelled by rapid population growth and immigration..But with generous pandemic-related income supports having raised household saving, some members argued that consumers still had plenty of capacity to spend even as income growth moderates..Although the MPC plays no role in setting rates, its members make recommendations for the BoC’s upcoming interest rate announcement on Sept. 6, the subsequent announcement and the announcements six months and one year ahead..It’s recommending BoC Governor Tiff Macklem hold the overnight rate at 5% until at least March of next year and gradually start lowering them to 4.25% by September..Immigration and fiscal policy were also major themes in the panel’s deliberations, it said. .Although recent strong growth in temporary and permanent residents should increase Canada’s productive capacity over time, MPC members judged that rapid population growth is currently adding to inflationary pressure — since demand for housing and consumer goods and services precedes labour-force participation — while business investment and productivity are weak. .“With respect to fiscal policy, many members noted governments should be practicing more restraint at this point in the cycle,” it said, while worrying that ‘political pressures’ — an upcoming federal election — “might lead to more spending, which would add to inflationary pressure.”.Looking abroad, members noted the surprising recent strength of spending in the US – a support for Canadian exports – and weakness overseas, particularly in China which translates as a negative for both exports and commodity prices, such as oil..Back in Canada, many council members emphasized that while spending and activity are both moderating — reflected in lower overall inflation numbers — continued pressure on capacity put further progress towards broader targets in doubt..Canada’s inflation rate fell to 2.8% in July, the lowest in two years, but remains above the BoC’s 2% target. That helps explain why MPC members failed to recommend earlier, larger reductions in the overnight rate. .“Several commented that the Bank of Canada needed to be resolute in ensuring that inflation would continue to decline before lowering its policy rate,” it said..This is what the Western Standard is up againstThe Trudeau government is funding lies and propaganda by directly subsidizing the mainstream media. They do this to entrench the powerful Eastern, woke and corrupt interests that dominate the political, social and economic institutions in Canada. Federal authorities are constantly trying to censor us and stop us from publishing the stories that they don’t want you to read. Ottawa may weaponize our taxes and police against us, but we’ve got a powerful ally on our side.You. Free men, and free women. We need you to stand with us and become a member of the Western Standard. Here’s what you will get for your membership:Unlimited access to all articles from the Western Standard, Alberta Report, West Coast Standard, and Saskatchewan Standard, with no paywall. Our daily newsletter delivered to your inbox. .Access to exclusive Member-only WS events.Keep the West’s leading independent media voice strong and free.If you can, please support us with a monthly or annual membership. It takes just a moment to set up, and you will be making a big impact on keeping one the last independent media outlets in Canada free from Ottawa’s corrupting influence.
