In this edition:
Bank of Canada says rates are too stimulative
Pierre Poilievre’s threat to fire Tiff Macklem
New Zealand launches trade dispute against Canada
43% of Canadians ‘outright concerned’ about recession
Bank of Canada says rates are too stimulative, downplays 75 bps hike
The Bank of Canada’s policy rate, at 1%, is “too stimulative” given soaring inflation and needs to return to more neutral levels “quickly,” an official said on Thursday, while downplaying the likelihood of a supersized increase.
Deputy Governor Toni Gravelle, speaking to economists in Montreal, also said the central bank would likely revise up its near-term inflation projections, as the “perfect storm” of global and domestic price increases continue to persist.
“Our policy rate, at 1%, is too stimulative, especially when inflation is running significantly above the top of our control range,” Gravelle said. “We need our policy rate to be at more neutral levels.”
What you need to know about Pierre Poilievre’s threat to fire Tiff Macklem
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.”
Later in the debate, the 42-year-old career politician used the F word: “I will fire the governor of the central bank to get inflation under control.”
That’s unusual, since there’s a code in Ottawa that arm’s-length Crown corporations, especially the central bank, should be spared that level of political attack as it undermines confidence that technocrats will be left alone to do their work without interference from elected officials.
New Zealand launches trade dispute against Canada in growing dairy backlash
New Zealand is initiating a formal trade dispute against Canada, accusing the Trudeau government of breaking its promises on dairy imports under the Trans-Pacific Partnership (TPP) agreement.
The move is part of a growing international backlash against what is seen as Canada’s limp embrace of its dairy obligations under recent trade agreements in North America, Europe and Asia-Pacific.
Trading partners have been historically critical of the Canadian supply management system, which uses production controls and tariffs to protect domestic dairy farmers. As a concession to those trading partners, Canada has agreed to let some imported butter and cheese slip past the tariff barrier. That tariff-free dairy is known as the tariff-rate quota, or TRQ. Those quotas were expanded under the TPP in 2018, as well as under the United States-Mexico-Canada Agreement (USMCA), the pact that replaced the North American Free Trade Agreement in 2020.
Nanos: 43% of Canadians ‘outright concerned’ about recession
Reading Recommendations
Canadian bid to block Rogers-Shaw mega-deal more a long shot than lock
Reuters
Canada’s Competition Bureau has blocked Rogers Communications’ C$20 billion ($15.4 billion) proposal to buy Shaw Communications, but the regulatory agency’s patchy record in legal fights raises the prospect the deal could go through with more concessions.
The agency this week rejected the deal, saying it would undermine competition in a country that has some of the world’s steepest wireless rates and where anger over high bills has prompted Canada’s Liberal government to vow to cut prices.
Regulators also poured cold water on a proposed full divesture of Calgary-based Shaw’s wireless business, Freedom Mobile, labeling it as insufficient to address the competition concerns. Armed with data showing the big three Canadian telecoms players – Rogers, BCE Inc and Telus – were able to charge higher prices in markets where they were dominant, the bureau hopes to win its challenge in the Competition Tribunal.
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Through the Daily Updates, the GNCC aims to deliver important business news in a timely manner. We disseminate all news and information we feel will be important to businesses. Inclusion in the Daily Update is not an endorsement by the GNCC.
