Summertime and inflation ain’t easy

Controlling inflation with interest rates can work, but at a terrible cost

Summertime and inflation ain’t easySummer heat isn’t the only thing making Canadians sweat this summer; abnormally high inflation and rising interest rates are putting the heat on many Canadians. We’ve gone from 0 per cent inflation in August 2020 to 8.1 per cent in June 2022. That’s really fast. The last time we saw anything like it was 1970-73…

Economic growth coming close to a dead stop by end of 2022

And the Trudeau government has no convincing plan to address the problem

Economic growth coming close to a dead stop by end of 2022By Jock Finlayson and Ken Peacock The threshold has been crossed. Canada’s largest bank, RBC Financial Group, just published a report predicting that Canada will tip into recession in early 2023. RBC’s call is unusual. Anticipating recessions is notoriously difficult. And it is uncommon for analysts at any of the country’s large financial institutions to…

Hunker down Canadians. Economic storm clouds on Canada’s horizon

Supply chain problems, aging demographics and the push for net zero will drive up government spending

Hunker down Canadians. Economic storm clouds on Canada’s horizonThe era of low interest rates and inflation has ended, and now is the time for governments to show restraint. But recent precedent suggests that’s unlikely. Canadian year-over-year inflation hit 7.7 per cent in May, the highest in nearly 40 years, and I predict it will go still higher. Ten years ago, Parliamentary Budget Officer…

We’re paying the price for artificially low interest rates

Very low interest rates provide a perverse incentive for politicians to rack up more debt

We’re paying the price for artificially low interest ratesCanadians are feeling the effects of rising inflation everywhere, from the grocery store to the gas station. In response to the highest level of inflation in three decades, the Bank of Canada recently increased its policy interest rate to 0.50 per cent after holding it steady at 0.25 per cent for two years. In a…

Bad central bank policy has us heading toward a recession

The next few months may only bring stagnation but a full-blown recession is more likely

Bad central bank policy has us heading toward a recession‘Financial repression’ refers to governments or central banks, such as the Bank of Canada or the U.S. Federal Reserve Board, intervening in financial markets to suppress interest rates. Central banks have been intervening for nearly two years, causing a serious disruption in the financial markets. The official rates of the Bank of Canada and the Federal…

Thanks to government, housing and energy are becoming luxuries

Much of the blame for sky-high housing and energy prices is on governments

Thanks to government, housing and energy are becoming luxuriesIn a country like ours, with its vast expanses and abundant natural resources, housing and energy should be cheap. Yet over the past two decades, housing prices have shot up much faster than the growth in incomes, and now energy prices are doing the same. In both cases, much of the blame is on government.…

Surprise! Food prices are on their way up

Prices will go up by as much as five per cent this year, or almost $700 more for groceries for the year for an average Canadian family

Surprise! Food prices are on their way upWhat was purely an academic supposition a few months ago is now actually happening. Along with higher interest rates, inflation is likely to become one of this year’s biggest business stories. And food prices won’t be immune. Many agricultural commodity prices have skyrocketed over last year. Corn is up 84 per cent, soybeans are up…

What the Biden administration means for Canada

What the Biden administration means for CanadaAs Canadians watched this week’s presidential inauguration and the immediate aftereffects (which include a scuttled Keystone XL pipeline), many wonder what a Biden administration will mean for Canada. And for good reason. A dramatic change in governance in the United States will likely have significant implications for Canada so Canadian policymakers in both the private…

Federal finances remain vulnerable to fluctuating interest rates

Federal finances remain vulnerable to fluctuating interest ratesBy Alex Whalen and Milagros Palacios The Fraser Institute There’s been a lot of movement in Ottawa lately, including Bill Morneau’s resignation as federal Finance minister, with Chrystia Freeland taking his place. Unfortunately, the federal government’s recent fiscal snapshot only added to the uncertainty. Why? Because there’s no plan to restore sustainability in federal finances. This…

Canadian economy will stall in 2020

The next two years will probably bring feeble increases in GDP, in line with 2019’s uninspiring performance. Job creation is likely to decelerate

Canadian economy will stall in 2020As the clock winds down on 2019, it’s time to ponder what the coming year may have in store for the Canadian economy. To provide some context, 2019 hasn’t been a great year for the economy, with inflation-adjusted gross domestic product (GDP) expanding by around 1.6 per cent. This was less than growth in both…