Bank of Canada Should Retire CPI-common
The Bank of Canada targets 2 percent annual increases in the Consumer Price Index (CPI). However, some of the CPI’s components are volatile, making it difficult to determine inflation’s underlying trend – critical in the proper setting of monetary policy. The Bank has created a series of core inflation measures as a result. One of […] Robson, Dahir – It’s Fall – Time Governments Told You Where Your Money Went
From: William B.P. Robson and Nick Dahir To: Canadian Taxpayers Date: September 21, 2022 Re: It’s Fall – Time Governments Told You Where Your Money Went We are more than half-way through September. The fiscal years of Canada’s senior governments ended almost six months ago. If these governments were companies listed on Canadian stock exchanges, […] Only Hot Air? The Implications of Replacing Gas and Oil in Canadian Homes
Canadian homes emit about six percent of Canada’s total greenhouse gas (GHG) emissions. The Federal government aims to bring down 2030 building emissions by 42 percent compared to 2019, with the entire economy producing net zero emissions by 2050. This report examines current sources of emissions from Canadian homes and presents a scenario in which […] Reality Check Needed on Green Home Targets
Federal targets for reducing greenhouse gas emissions from Canadian homes face major challenges, according to a new report from the C.D. Howe Institute. In “Only Hot Air? The Implications of Replacing Gas and Oil in Canadian Homes,” authors…Ambler, Kronick – How Fast to Move? Assessing the Bank’s Way Forward.
From: Steve Ambler and Jeremy M. Kronick To: Canadian Inflation Observers Date: September 20, 2022 Re: How Fast to Move? Assessing the Bank’s Way Forward. The Bank of Canada continued its tightening cycle this month with 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 […]Mahboubi, Zhang – Canada’s Evolving Labour Shortage Challenge
From: Parisa Mahboubi and Tingting Zhang To: Canadians Concerned About Labour Shortages Date: September 19, 2022 Re: Canada’s Evolving Labour Shortage Challenge All business sectors, regardless of size, are facing hiring difficulties. Vacancies are increasing, but there is a dearth of job seekers. As the boomers age, labour shortages will only get worse, limiting economic […] Taxes can amplify the pain of inflation – Globe and Mail Op-Ed
Inflation around 8 per cent is something many Canadians had never experienced until this summer. As a country, we are rediscovering how much inflation hurts. The shrinking value of our dollars is bad enough on its own, but inflation harms us in more subtle ways, including through its interactions with taxes and government benefits. Now would be a good time for some changes to lessen the pain.
Below are several examples.
When personal income tax thresholds and benefits are fixed in dollar terms, inflation pushes workers into higher tax brackets even when their real incomes do not rise. Some tax thresholds are indexed to inflation, but others are not.
Alberta, for instance, has just announced it will resume indexation…
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 […] Where Did Your Money Go? Taxpayers Need Fiscal Transparency
Taxpayers and citizens need greater fiscal transparency from Canada’s federal, provincial and territorial governments, says the latest report from the C.D. Howe Institute. In “The Right to Know: Grading the Fiscal Transparency of Canada’s Senior Governments, 2022,”…The Right to Know: Grading the Fiscal Transparency of Canada’s Senior Governments, 2022
Canada’s senior governments raise and spend huge amounts, and have legally unlimited capacity to borrow when their expenses exceed their revenues. Holding public officials accountable for their spending, taxing and borrowing is a foundational task in a system of representative government. Citizens have the right to know, and elected representatives have duties to them. […] Kronick, Bafale – Unpacking Canada’s Persistent SME Growth Problem
To: Canada’s Policymakers From: Jeremy M. Kronick and Mawakina Bafale Date: September 13, 2022 Re: Unpacking Canada’s Persistent SME Growth Problem Only 2 percent of mid-sized Canadians firms grow into large companies with more than 500 employees, according to a 2016 Business Development Bank study. More recent data suggests that number has not budged. Alongside weak firm growth, there […] 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…