BREAKING Slovak interior minister says 'lone wolf' has been charged with shooting prime minister
The Slovak interior minister said Thursday that a 'lone wolf' has been charged in the shooting that seriously wounded Prime Minister Robert Fico.
The Bank of Canada has raised its overnight rate by 25 basis points, moving its policy rate to 4.5 per cent from 4.25 per cent. If projections hold steady, the central bank has signalled a pause at its current rate, while it assesses the full impact of its hikes on the economy.
“What [that] means is that if economic developments and in particular inflation comes down in line with our forecast, that will affirm that we’ve likely done enough,” said Bank of Canada Governor Tiff Macklem during a press conference in Ottawa.
Excluding food and shelter, the central bank is seeing declines in inflation, due to decreases in gasoline and durable goods prices, according to the bank’s Monetary Policy Report released on Wednesday.
The current inflation rate sits at 6.3 per cent. The bank projects that number to decline to 3 per cent by mid-2023, with a return to its inflation target of 2 per cent in 2024.
This decline is due to improvements in global supply chains, with shipping costs returning to pre-pandemic levels. However, Canadian businesses continue to face challenges related to sourcing a wide range of supplies and hiring labour.
The Canadian labour market continues to be tight, with the unemployment rate sitting at a historic low of 5 per cent. This tight labour market has contributed to higher-than-normal wage growth, which the bank says poses a challenge to the inflation target.
“Unless a surprisingly strong pickup in productivity growth occurs, sustained 4 per cent to 5 per cent wage growth is not consistent with achieving the 2 per cent inflation target,” reads the report.
The bank says there is a risk the labour market might remain tighter than expected, feeding into higher costs in the services sector of the economy.
Meanwhile, the Canadian economy grew by 3.6 per cent in 2022, higher than the bank’s projection in October. The economy is projected to stall this year, with gross domestic product sitting at 1 per cent for the year. The bank expects this slowdown will allow supply to catch up to demand.
“We expect that growth through the next three quarters is going to be pretty close to zero,” said Macklem. “That is an economy that is stalled and it’s not going to feel good.”
Household spending is expected to remain moderate in 2023, as consumers cut spending due to the higher cost of borrowing. The highest reduction in spending can be found in travel and restaurants.
The bank also expects house prices will continue to decline this year, while Canadians pay a higher proportion of their disposable income to service their mortgage costs. Construction and housing resales are expected to pick up in the latter half of 2023, as higher demand from immigration and low inventory kicks in. Ratehub.ca co-CEO and CanWise mortgage lender president James Laird thinks that drop in home prices may soon come to an end.
“Today’s announcement should mean the floor for home values across the country is near,” said Laird. “Home values might drift higher as long as the key overnight rate has peaked.”
The overall global economic outlook continues to face volatilities, most notably the war in Ukraine and uncertainty around the results of China’s COVID-19 policies. Foreign demand on exports is expected to slow in the near term, before picking back up in 2024. The global economy is expected to grow by 2 per cent this year.
Speaking to reporters in Hamilton, Ont., Prime Minister Justin Trudeau acknowledged the cost of living crisis faced by Canadians and defended his government’s spending and fiscal position.
“By being targeted in our supports, and by making the kinds of investments that are going to create sustainable economic growth for years to come, we can support Canadians without endangering the track that the Bank of Canada has put us on to reduce inflation,” he said Wednesday.
His comments come a day after Finance Minister Chrystia Freeland expressed the need for more fiscal prudence in a time of global economic uncertainty and said that the government was “keeping its powder dry.” Conservative Leader Pierre Poilievre disagreed with this assessment of the state of Canada’s finances, blaming current inflationary pressures on the federal government’s overspending.
“The cost of government is driving up the cost of living,” he said on Wednesday, during a press conference in Ottawa. “A half trillion dollars of inflationary Trudeau deficits are bidding up the goods we buy and the interest we pay. He's added more debt than all previous prime ministers combined.”
In the interest of more transparency, Macklem announced that on Feb. 8, the bank will release for the first time a more detailed summary of the governing council’s deliberations, to provide more insight into how the central bank makes its policy decisions.
The next policy rate announcement is expected on March 8.
The Slovak interior minister said Thursday that a 'lone wolf' has been charged in the shooting that seriously wounded Prime Minister Robert Fico.
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