We have been stuck in a low-interest period for almost a decade now, and with that apparent inertia comes the challenge of knowing when to start reversing course. Last Wednesday’s interest rate announcement and press release by the Bank of Canada were slightly more hawkish (or slightly less dovish) in tone than its previous announcement, but it gave no explicit hints that rate increases are on the immediate horizon. However, stronger economic data that support the bank’s own internal forecasts suggest they should be. At a minimum, communication with the public should start to prepare the market for such increases.
To understand why, let’s review the concept of the neutral rate of interest. In the world of central banking, the…
Low fertility rates, increasing life expectancies and the aging of baby boomers are causing Canada’s old-age dependency ratio to rise. This increase in pensioners relative to the working-age population will strain the sustainability of our social security system. Should the age of eligibility (AOE) for seniors’ programs be raised? If so, when? Since Ottawa seems to be avoiding the problem, we propose a politics-free solution.
We propose that Ottawa adopt an automatic balancing mechanism that would automatically adjust the AOE for programs like Old Age Security (OAS) and Canada Pension Plan (CPP) based on demographic calculations outside of political influences. The formula would deem that a constant proportion of one’s adult life…
It haunts us still. Softwood lumber is back, the defining Canada-U.S. trade dispute of the ages.
The preliminary duties announced Tuesday are designed to affect billions of dollars of Canadian exports. Even ahead of final duties to be announced in June, these will decimate Canadian exports and affect the livelihood of many thousands of Canadians.
Over the coming months, softwood lumber will dominate the front pages of our newspapers (though relegated to the back pages in U.S. media).
As if there wasn’t already enough tension in the bilateral relationship, softwood lumber adds even more stress, with President Donald Trump’s demand for NAFTA renegotiations (which he describes as the most “disastrous” trade agreement…
