When I am on the road talking to clients about the economy and the path of Federal Reserve policy, the most frequent question I get is: If the economy is growing how can policy be restrictive? The answer lies not so much in the current economy as it does in what awaits if the Fed continues along its ... READ MORE >
Search Results for: inflation
Immigration and the rebalancing of the Canadian economy
The main risk underlying the Canadian economy has shifted from high inflation to high unemployment and slowing growth. The government’s recent restrictions on immigration reflect its attempt to respond to these shifting dynamics. But while these restrictions could temporarily curb unemployment and ... READ MORE >
FOMC preview: Why the Fed’s pivot to lower rates matters
The Federal Open Market Committee’s meeting on Sept. 18 will implement a significant turn away from a focus on price stability—which has been achieved—to supporting maximum sustainable employment. In turn, the policy pivot will create the conditions for greater fixed business investment, increased ... READ MORE >
U.S. August CPI: Further signs of moderation as energy prices decline
Inflation inside the consumer price index continued to moderate in August as the top-line figure increased by 0.2% on the month and by 2.5% on a year-ago basis. Core inflation increased by 0.3% and 3.2%, respectively, on the back of a 1% decline in used cars and truck prices as well as an 0.8% drop in ... READ MORE >
Financial markets update: Front-running the Fed’s first cut, and our new call on rates
Investors expect the Federal Reserve to cut the federal funds rate and signal a series of further cuts through next year at its next meeting on Sept. 18. Those expectations have resulted in a notable decline in 10-year bond yields. By the second week of August, investors had pushed 10-year Treasury ... READ MORE >
Canada’s job market continued to cool in August
The data in Canada's labour survey for August paints a picture of a cooling job market as the economy added a mere 22,000 jobs and the unemployment rate rose to 6.6 per cent. The employment rate rose 0.1 percentage points to 60.8 per cent. More rate cuts are needed, and it will take time for the recent ... READ MORE >
U.S. August jobs report: A soft landing in the economy
The U.S. August report was a solid if unspectacular one that reflected the type of non-inflationary job growth that will give Federal Reserve policymakers confidence as they embark on their long-awaited campaign to reduce rates. Once one adjusts for the benchmark revision, employment has been ... READ MORE >
Bank of Canada cuts its policy rate to 4.25 per cent
The Bank of Canada reduced its overnight rate to 4.25 per cent amid cooling inflation and soft growth. The central bank's dovish statement went so far as to indicate that more rate cuts are coming as inflation continues to decline toward the 2 per cent goal next year. Now, with unemployment rising in a ... READ MORE >
With higher capital gains tax rate, Canada renews debate over growth
For nearly a quarter century, Canada’s capital gains tax rate has remained largely the same, at 50 per cent. But that changed this year when the federal government, in its current budget, called for the new inclusion rate to be set at 66.7 per cent. While the move might help the government boost ... READ MORE >
Canada’s rail strike disrupts supply chains
Canada’s rail work stoppage could disrupt Canada’s supply chains, costing billions of dollars and tens of thousands of jobs. Supply chain snarl could also put upward pressures on prices just as inflation returns to 2.5%. But on a broader scale, the impact would be minimal and short-lived if workers ... READ MORE >