B.C. seeks ban on public drug use, dialing back decriminalization
The B.C. NDP has asked the federal government to recriminalize public drug use, marking a major shift in the province's approach to addressing the deadly overdose crisis.
The Canadian bond market is coming to the view that expected multiple interest rate hikes in 2022 by the Bank of Canada, including one potentially this week, will bring price pressures under control, albeit at a cost of slower economic growth.
This marks a shift in perception that is underscored by moves in the so-called inflation breakeven rate, a market measure of inflation expectations. The 10-year breakeven rate has dropped below 1.9 per cent this month after touching 2.3 per cent in November, its highest level by far in data going back to 2015.
In contrast, recent survey data from the Canadian central bank showed that expectations for price increases among consumers and businesses have climbed.
Lowering of inflation expectations give businesses greater confidence to pursue their growth plans.
"With the market pricing in an aggressive Bank of Canada tightening cycle, it implies that inflation is less likely to remain elevated in future years," said Andrew Kelvin, chief Canada strategist at TD Securities.
Money markets see a 65 per cent chance that Canada's central bank will raise its benchmark interest rate, which currently sits at 0.25 per cent, in a policy announcement on Wednesday despite uncertainty triggered by the Omicron variant of the coronavirus. It would be the first rate hike since October 2018.
Investors expect six hikes in total this year, which would lift the policy rate to its pre-pandemic level of 1.75 per cent. The expected number of increases is up from four in December and two more than markets expect from the Federal Reserve.
The urgency that the market sees for the BoC to start tightening comes as Canadian inflation, which hit a 30-year high of 4.8 per cent in December, threatens to overshoot the central bank's 2 per cent target for longer by feeding expectations for future price increases.
Signs of an overheated Canadian housing market could also concern the central bank after data for December showed the average selling price of a home was up nearly 18 per cent from a year earlier.
But the potential for an easing in supply-chain disruptions later this year could reduce price pressures, say economists, while past increases in energy prices will fall out of the inflation calculation over time.
"Central banks in Canada and the United States are winning the psychological war, successfully convincing investors that they are serious about fighting inflation" said Karl Schamotta, chief market strategist at Cambridge Global Payments.
Bank of Canada Governor Tiff Macklem said in December that slack in Canada's economy caused by the coronavirus pandemic has substantially diminished, a key sign the central bank would begin hiking rates soon. The Fed has also turned more hawkish.
Both central banks tend to raise rates in 25-basis-point increments but could move faster.
Some time after the first hike, the BoC is expected to begin quantitative tightening, or QT, reducing the amount of bonds on its balance sheet that were bought during the pandemic to support the economy.
The combination of QT and rate hikes could weigh on economic activity, particularly after Canadians increased borrowing during the pandemic.
Household credit market debt was C$2.6 trillion in the third quarter of 2021, or about 177 per cent as a share of income, up 10 per cent from the final quarter of 2019.
But employment has climbed above its pre-pandemic level and people have accumulated an unprecedented amount of savings.
Economists estimate that the increase in savings over the pre-pandemic trend could be nearly C$300 billion, or about 20 per cent of annual spending.
Tightening "doesn't need to imply a painful economic period," Kelvin said. "It means that the period of above-trend growth probably comes to an end in the next two years."
(Reporting by Fergal Smith Editing by Denny Thomas and Paul Simao)
The B.C. NDP has asked the federal government to recriminalize public drug use, marking a major shift in the province's approach to addressing the deadly overdose crisis.
An orca whale calf that has been stranded in a B.C. lagoon for weeks after her pregnant mother died swam out on her own early Friday morning.
Donald Trump's defence team attacked the credibility Friday of the prosecution's first witness in his hush money case, seeking to discredit testimony detailing a scheme between Trump and a tabloid to bury negative stories to protect the Republican's 2016 presidential campaign.
Sophie Gregoire Trudeau says there is 'still so much love' between her and Prime Minister Justin Trudeau, as they navigate their post-separation relationship co-parenting their three children.
The Canadian Transportation Agency has hit a record high of more than 71,000 complaints in a backlog. The quasi-judicial regulator and tribunal tasked with settling disputes between customers and the airlines says the backlog is growing because the number of incoming complaints keeps increasing.
More than 115 people who viewed the solar eclipse in Ontario earlier this month experienced eye damage after the event, according to eye doctors in the province.
An Ontario man who took out a loan to pay for auto repairs said his car was repossessed after he missed two payments.
Philadelphia 76ers All-Star centre Joel Embiid has been diagnosed with Bell’s palsy, a form of facial paralysis he says has affected him since before the play-in tournament.
An American Airlines flight attendant was indicted Thursday after authorities said he tried to secretly record video of a 14-year-old girl using an airplane bathroom last September.
Mounties in Nanaimo, B.C., say two late-night revellers are lucky their allegedly drunken antics weren't reported to police after security cameras captured the men trying to steal a heavy sign from a downtown business.
A property tax bill is perplexing a small townhouse community in Fergus, Ont.
When identical twin sisters Kim and Michelle Krezonoski were invited to compete against some of the world’s most elite female runners at last week’s Boston Marathon, they were in disbelief.
The giant stone statues guarding the Lions Gate Bridge have been dressed in custom Vancouver Canucks jerseys as the NHL playoffs get underway.
A local Oilers fan is hoping to see his team cut through the postseason, so he can cut his hair.
A family from Laval, Que. is looking for answers... and their father's body. He died on vacation in Cuba and authorities sent someone else's body back to Canada.
A former educational assistant is calling attention to the rising violence in Alberta's classrooms.
The federal government says its plan to increase taxes on capital gains is aimed at wealthy Canadians to achieve “tax fairness.”
At 6'8" and 350 pounds, there is nothing typical about UBC offensive lineman Giovanni Manu, who was born in Tonga and went to high school in Pitt Meadows.