Canada, G7 urge 'all parties' to de-escalate in growing Mideast conflict
Canada called for "all parties" to de-escalate rising tensions in the Mideast following an apparent Israeli drone attack against Iran overnight.
With fiscal spending booming and households flush with cash, investors are betting that the Bank of Canada's next tightening cycle, expected to begin in 2022, will result in interest rates climbing above the previous peak for the first time in decades.
In four major tightening cycles since the early 1990s, the Bank of Canada's key interest rate has peaked at a level that was lower than the preceding endpoint.
But that could change in the next cycle, as historic levels of government spending globally raise prospects of an economic recovery from the COVID-19 crisis that is more robust than previous recoveries.
The Canadian government is spending C$101 billion ($81 billion), about 5 per cent of GDP, to stimulate the economy over three years, while U.S. President Joe Biden has proposed trillions of dollars of infrastructure spending. Canada sends about 75% of its exports to the United States.
A higher endpoint for rate hikes could give the BoC more firepower to fight the next downturn. It could also spur changes to the economy, raising the incentive to save and invest rather than borrow. Canadians have borrowed heavily in recent years to participate in one of the world's hottest housing markets.
Canada's central bank has signaled that it could begin raising rates from a record low of 0.25 per cent in the second half of next year, well ahead of the 2023 projection from the Federal Reserve.
Swap market data puts the peak of the expected tightening cycle, or the terminal rate, at about 2 per cent in five years, above the previous peak of 1.75 per cent.
"There is a lot more fiscal policy this time ... to me that's the real game changer," said Andrew Kelvin, chief Canada strategist at TD Securities. "Canada, last cycle, was part of a global cycle where no central bank really achieved what they would regard to be neutral rates."
The neutral rate is the level that is expected to be in place when the economy is at full strength and inflation is on target, so it's a signpost of sorts for where rates could go. The BoC's current estimate for the neutral rate is a range of 1.75 per cent to 2.75 per cent.
The central bank has also estimated that Ottawa's support for households during the pandemic combined with reduced spending by Canadians, who endured lengthy lockdowns, boosted savings in 2020 by about $180 billion.
That extra cash is likely to add to consumer spending over the coming decade, which could support a terminal rate that is higher than not only the previous cycle peak but the neutral rate, said Royce Mendes, a senior economist at CIBC Capital Markets.
"All that money has to eventually go somewhere," Mendes said. "It is not just going to sit in the bank accounts of households for decades into the future."
Canada called for "all parties" to de-escalate rising tensions in the Mideast following an apparent Israeli drone attack against Iran overnight.
Hospital chaplain J.S. Park opens up about death, grief and hearing thousands of last words, and shares his advice for the living.
A woman who recently moved to Canada from India was searching for a job when she got caught in an online job scam and lost $15,000.
More money will land in the pockets of some Canadian families on Friday for the latest Canada Child Benefit installment.
The World Health Organization and around 500 experts have agreed for the first time on what it means for a disease to spread through the air, in a bid to avoid the confusion early in the COVID-19 pandemic that some scientists have said cost lives.
On Friday, the pop star released her 11th album and at 2 a.m. Eastern, she released "The Tortured Poets Department: The Anthology," featuring 15 additional songs.
The United States told the Group of Seven foreign ministers on Friday that it received 'last minute' information from Israel about a drone action in Iran, but didn't participate in the apparent attack, officials said.
American millionaire Jonathan Lehrer, one of two men charged in the killings of a Canadian couple in Dominica, has been denied bail.
Group of Seven foreign ministers warned of new sanctions against Iran on Friday for its drone and missile attack on Israel, and urged both sides to avoid an escalation of the conflict.
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.
Kevin the cat has been reunited with his family after enduring a harrowing three-day ordeal while lost at Toronto Pearson International Airport earlier this week.
Molly Knight, a grade four student in Nova Scotia, noticed her school library did not have many books on female athletes, so she started her own book drive in hopes of changing that.
Almost 7,000 bars of pure gold were stolen from Pearson International Airport exactly one year ago during an elaborate heist, but so far only a tiny fraction of that stolen loot has been found.
When Les Robertson was walking home from the gym in North Vancouver's Lower Lonsdale neighbourhood three weeks ago, he did a double take. Standing near a burrow it had dug in a vacant lot near East 1st Street and St. Georges Avenue was a yellow-bellied marmot.
A moulting seal who was relocated after drawing daily crowds of onlookers in Greater Victoria has made a surprise return, after what officials described as an 'astonishing' six-day journey.
Just steps from Parliament Hill is a barber shop that for the last 100 years has catered to everyone from prime ministers to tourists.
A high score on a Foo Fighters pinball machine has Edmonton player Dave Formenti on a high.
A compound used to treat sour gas that's been linked to fertility issues in cattle has been found throughout groundwater in the Prairies, according to a new study.