A better way to cool inflation is to make Canadian workers more productive Rising prices are hitting people hard in the pocketbook. And it is not just the sky-high and soaring home prices anymore. A visit to a grocery store or gas pump can lead to sticker shock and dining out has become even more…
The data shows that interest rate hikes are now increasing inflation, not decreasing it After nearly a year of interest rate hikes designed to fight inflation, rents in Canada are going up, and food costs remain stubbornly high. And while they might have helped in the summer of last year, interest rate hikes are now…
If there ever was a time for politicians to stop digging, it’s now It turns out endless spending does come with a hangover: soaring interest rates. Ontario’s finances have been awash in red ink since Jays star Vladimir Guerrero Junior was in diapers. Former premier Dalton McGuinty took over Queen’s Park and started Ontario’s debt…
No. The need to broaden access and expand government contributions is urgent
The risk of recession is now in clear sight. But as the Bank of Canada pursues a course of aggressive interest rate hikes designed to wrestle inflation to the ground, the potential cost is hundreds of thousands of jobs. The August labour force survey is already revealing a worrying increase in the unemployment rate. At…
Governments must begin to address their own roles in keeping housing prices high
The recent rise in interest rates has dampened demand for home sales in Canada. The hike, inevitable given how historically low rates have been, has taken some of the froth off housing prices. However, given how high home prices still are in Canada, a useful question to ask is what governments can do to reverse…
Controlling inflation with interest rates can work, but at a terrible cost
Summer 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…
And the Trudeau government has no convincing plan to address the problem
By 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…
Supply chain problems, aging demographics and the push for net zero will drive up government spending
The 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…
Very low interest rates provide a perverse incentive for politicians to rack up more debt
Canadians 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…
The next few months may only bring stagnation but a full-blown recession is more likely
‘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…