Bank of Canada should now pause rate hikes and reflect – Financial Post Op-Ed
The Bank of Canada continued its tightening cycle on Wednesday by announcing a 50-basis-point increase in its target for the overnight rate. That came as a surprise to those who expected a 75-basis point increase, but it’s still a hefty hike.
It continues the Bank’s front-loading of its rate increases, which is intended to reduce the scale of future rate hikes. In our view, this latest increase was needed – both to reduce the harm of further increases and to re-anchor inflation expectations – but now the time has come to pause and reflect.
Since the Bank’s September 7th rate boost, the consumer price index (CPI) numbers for August and September have been published. Headline inflation ticked…
Miville Tremblay – Sustainable Finance and its Critics
To: Canadian ESG Observers From: Miville Tremblay Date: October 21, 2022 Re: Sustainable Finance and its Critics Sustainable finance is not green enough! No, it’s too woke! Worse, it’s a damn mess! Attacks abound on sustainable finance, which had grown to $3 trillion US in global mutual fund and ETF assets by the end of 2021. That number has […] Credit Unions Punch Above Their Weight With Canadian Smes
Source: CFIB December 2019 Research Snapshot. Credit unions in Canada play an important role in promoting financial services competitiveness. At the end of 2019, just before COVID-19, total credit union market share (assets/total financial institution assets) was 7.3 percent. While small relative to the big banks, credit unions punch above their weight in providing banking […] La crise de croissance de la finance durable – La Presse Op-Ed
La finance durable n’est pas assez verte ! Non, elle est trop woke ! Pire, un foutu bordel ! lancent les critiques. Elle vit plutôt une crise de croissance.
Les actifs mondiaux des fonds communs de placement et des FNB (fonds négocié en Bourse) en finance durable ont triplé durant la pandémie, pour atteindre 3000 milliards de dollars américains, fin 2021.1 Ils ont reculé depuis avec la correction des marchés, mais les flux restent positifs, malgré les dénonciations.
Les plus acerbes sont sorties de la bouche des gouverneurs de la Floride et du Texas, héraults de la droite dure et vaillants défenseurs du pétrole et des armes à feu.
Les tirs viennent aussi de la gauche, pour qui la…
Kronick, Robson – The Economic Perils of Federal Tax Hikes on Banks and Insurers
From: Jeremy M. Kronick and William B.P. Robson To: Minister of Finance Chrystia Freeland Date: October 4, 2022 Re: The Economic Perils of Federal Tax Hikes on Banks and Insurers Taxes are a necessary evil. Necessary, because we must fund government services. Evil, because they do damage beyond the cost to those who pay them – discouraging work […] Federal tax hikes on banks and insurers risk causing broader economic damage – Globe and Mail Op-Ed
Taxes are a necessary evil. Necessary, because we must fund government services. Evil, because they do damage beyond the cost to those who pay them – discouraging work and saving, misallocating where our scarce resources go, and encouraging underground activity. The federal government’s coming levies on banks and insurers – a corporate income surtax and the “Canada Recovery Dividend” – don’t even qualify as “necessary.”
These taxes were part of the Liberal campaign platform for last year’s federal election. The platform committed to raising the corporate income tax rate on bank and insurer profits above $1-billion from the 15 per cent other businesses pay to 18 per cent. It also proposed the Canada Recovery Dividend: a…
Pigeon, Fulton – Building Greater Resilience in Canada’s Big Credit Unions
To: Canadian Finance System Watchers From: Marc-André Pigeon and Murray Fulton Date: September 16, 2022 Re: Building Greater Resilience in Canada’s Big Credit Unions Even as the 2007-2009 financial crisis recedes from memory, financial sector policymakers continue to roll out a policy agenda built around what is believed to be a key cause of the financial crisis, namely […] How high should interest rates go and how fast? – Financial Post Op-Ed
The Bank of Canada continued its tightening cycle last week by announcing a 75-basis-point increase in its overnight rate target. That target is now above the top end of the Bank’s estimate of the “neutral rate” of two to three per cent. But how fast will the rate go from here?
The neutral rate is the rate the Bank thinks would be appropriate for an economy producing at full capacity, with inflation running at two percent. Most economists and market-watchers believe the overnight rate needs to go beyond neutral in order to fight inflation. Despite a one-month drop in the year-over-year increase in the CPI from 8.1 per cent in June to 7.6 per cent in July, inflation is a long way above the top end of the one-to-three per cent…
Aiming Higher: How to Build Greater Resiliency for Large Credit Unions in Canada
Credit unions represent an important part of the Canadian banking sector and, therefore, the Canadian economy. Outside of Quebec, at the end of 2021 credit unions held almost $280 billion in assets, representing about 7 percent of banking sector assets. While improving corporate governance has been part of the reform agenda for federal policymakers and […] Ed Devlin on BNN – The hidden sting in removing stimulus: A tide of new debt
Ed Devlin, Senior Fellow at the C.D. Howe Institute and founder of Devlin Capital, joined BNN Bloomberg and discussed the Bank of Canada being in uncharted territory as it implements quantitative tightening – the shrinking of its balance sheet – while also tightening interest rates. He advised the Bank to be flexible if a flood of new government bonds ends up swamping Canada’s illiquid market.
Ambler, Kronick – Reintegrate Money into Monetary Policy Analysis
From: Steve Ambler and Jeremy M. Kronick To: Bank of Canada Governing Council Date: July 5, 2022 Re: Reintegrate Money into Monetary Policy Analysis Headline inflation, which has reached 7.7 percent, has become decidedly unsettled. Until the 1980s, most economists believed there was a significant relationship between money and inflation in both the short and long runs. However, […] Jeremy Kronick on BNN – BoC’s policy rate must go much farther to get inflation back down
Jeremy Kronick, Associate Director of Research at the C.D. Howe Institute, joined BNN Bloomberg to explain how stimulus spending during the pandemic has created an overhang in the economy and prices have to play catch-up with the money now sloshing around in the system. Kronick says the slowdown in the rates of money growth and in the housing market are positive signs for taming inflation.