Why these interest rate hikes are so necessary – Globe and Mail Op-Ed

On Wednesday, the Bank of Canada increased the scope of its interest rate increases, raising its overnight rate target by 100 basis points to 2.5 per cent. We haven’t seen a hike that big in recent memory, and the target rate is now higher than at any time since before the financial crisis in 2008.

With mortgage and other market interest rates increasing with the overnight rate, fears of a recession are mounting. There are two big questions. First, are there alternatives to the blunt overnight rate for fighting inflation? Second, how bad will the recession need to be to bring inflation back down? Unfortunately, the answer to the first question is no, there aren’t any viable alternatives. However, the recession…

Grootendorst, Moradpour – Resurrecting Connaught Labs not the Answer for Vaccine Self-Sufficiency

Angelo Nikolakakis – Global Tax Deal: Who Wins and Who Loses?

Lives Put on Hold: The Impact of the COVID-19 Pandemic on Canada’s Youth

Canada’s economy is decapitalizing – Financial Post Op-Ed

Yet another alarming inflation number from Statistics Canada — 7.7 per cent from May to May — has underlined that something is seriously wrong with Canada’s economy. Prices are rising fast because spending is rising fast while production is not. The capacity of our economy to produce is flatlining because business investment has been so weak that the stock of productive capital per worker is falling. If we do not turn that around, the outlook for real growth in living standards in the coming months, years and decades is bleak.

The basic problem is chronically low business investment, which has been the highlight — or lowlight — of Statistics Canada’s quarterly GDP reports for several years now. The cumulative effect of low rates…

Canada’s Youth Face Career “Scarring,” Learning Losses Post-Pandemic

S4 E9: Inflation and a Recession with Bill Robson and Jeremy Kronick

Raising interest rates to cool inflation is only part of the solution. But as the C.D. Howe Institute’s Bill Robson and Jeremy Kronick tell host Michael Hainsworth, fiscal policy that increases corporate Canada’s productive capacity to meet demand isn’t likely, leaving the central bank with the task of dousing the inflationary fire from 2 years of COVID-19 spending.

Ed Devlin on BNN – Canadian interest rates alone won’t solve the global inflation problem

Ed Devlin, Founder of Devlin Capital and Senior Fellow at the C.D. Howe Institute (also former Head of Canadian Portfolio Management, PIMCO), joins BNN Bloomberg for reaction to Bank of Canada’s largest rate hike since 1998. He says the central bank is frontloading rate hikes today instead of indicating a faster tightening cycle.

Laurin, Robson – Seniors Double Whammy: A Sagging Market and Obsolete Pension Rules

Vladimir Putin’s $10-trillion war – Financial Post Op-Ed

At the four-month mark, the costs of Vladimir Putin’s “special military operation” have both soared and spread. The war already has moved well up the ranks of the bloodiest modern wars on record, the direct economic costs have mounted steeply, and the spillover effects have gone global.

For Ukraine, the physical damage is now likely on the order of US$150 billion as city after city in the path of Putin’s army is shelled into rubble. Ukraine’s economy will contract by 45 per cent in 2022, based on recent World Bank estimates. This reflects the mass destruction or shutdown of businesses, the blockade of Ukraine’s main export routes through Black Sea ports and the dislocation of one-third of its households and workers. For the…

Give seniors more saving room – Financial Post Op-Ed

Prices are rising and stock markets are falling — a toxic combination, especially for older Canadians who rely on savings in registered retirement saving plans (RRSPs) and defined-contribution pension plans, and who are drawing down savings in registered retirement income funds (RRIFs) and Life Income Funds (LIFs).

Many will now want to save more, to alleviate their risk of running out of money before they die. At the very least, Canadians over 71 should not face tax rules that force them to sell when the market is down, permanently lowering their prospects for retirement.

Instead of exacerbating their problems the federal government should help solve them.

To begin with, retirees need a break on mandatory RRIF…

C.D. Howe Institute Monetary Policy Council Calls for Bank of Canada to Raise Overnight Rate to 2.25 Percent Next Week and 3.25 Percent by 2023

July 7, 2022 – The C.D. Howe Institute’s Monetary Policy Council (MPC) recommends that the Bank of Canada raise its target for the overnight rate, its benchmark policy interest rate, by 75 basis points to 2.25 percent on July 13th. The MPC recommends further increases over the coming year: to 2.75 percent in September and 3.25 percent by January 2023. Its call for the overnight rate in a year’s time was also 3.25 percent. The MPC also recommends that the Bank maintain the current pace of reduction in its holdings of Government of Canada bonds between now and September.

The MPC provides an independent assessment of the monetary stance consistent with the Bank of Canada’s 2 percent inflation target. William Robson,…