Live updates: Bank of Canada expected to deliver 6th interest rate hike

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Governor Tiff Macklem walks outside the Bank of Canada building in Ottawa, Ontario, Canada, on June 22, 2020.BLAIR GABLE/Reuters

The latest on the Bank of Canada rate decision

The Bank of Canada is expected to deliver another big interest rate hike today.

Governor Tiff Macklem has been unequivocal in recent weeks that interest rates must continue to rise to keep prices in check. Markets are pricing in a high probability that it will announce another 75 basis point rate hike on Wednesday, though some forecasters argue a smaller 50 basis point move is more likely.

Follow the live updates below.

9:25 a.m.

Twitter Space: How can young Canadians prepare for an economic downturn?

The interest rate hike expected this morning is a move that also risks pushing Canada further into recession.

For many younger Canadians, this economic downturn is their first and only adds to an already challenging financial situation. So how should Gen Z and millennials prepare financially? What will rising rates mean for the housing market? Is this a good time to invest? And what are the best strategies to save even with high inflation?

Later today at 2 pm ET, join The Globe and Mail for a live twitter space with Menaka Raman-Wilms, host of The Decibel daily news podcast. Globe personal finance writers Rob Carrick and Erica Alini, as well as personal finance expert Melissa Leong, will answer all your questions about housing, debt, savings, and investing.

Our panelists will also answer questions from listeners during the conversation. You can also send them in advance to or send us a direct message on Twitter.

– Balloon staff

8:45 a.m.

Rate hikes are beginning to have a negative impact on the Canadian labor market

Persistent interest rate increases are starting to cause Canada to shed jobs, even as certain sectors of the economy continue to experience labor shortages, according to a new report looking at the effects of Bank of Canada rate hikes on Workers.

Between May and September of this year, the Canadian economy lost nearly 100,000 jobs, almost all of them full-time. The only points in the past where equivalent numbers of jobs were lost over a four-month period were during recessions, said Jim Stanford, lead author of the report and director of the Center for Future Work, a Vancouver-based think tank.

“We saw these signs of job loss during recessions in the early 1980s, during the 2008-09 financial crisis, and more recently in the early stages of the COVID pandemic,” Dr. Stanford said. “Obviously, this is a sign that labor demand is shrinking or cooling down drastically.”

The shift in the labor market comes amid one of the fastest rate-hike cycles on record by the Bank of Canada, a calculated effort to cool inflation by raising borrowing costs for households and businesses.

Read the full story.

-Vanmala Subramaniam

8:10 a.m.

How the Bank of Canada ‘lockdown’ works

On days like today, when the central bank releases both a rate decision and a Monetary Policy Report (it happens four times a year), reporters arrive at the Bank of Canada headquarters just down the street from the Bank of Canada buildings. Parliament, as early as 7 am ET for a “lockdown.” They receive advance copies of the rate announcement (usually a few paragraphs) and the TPM (about 30-40 pages). The quarterly report is the bank’s most important policy document and includes the bank’s latest economic forecasts as well as a detailed discussion of the current economic climate, the bank’s expectations and major future risks.

Reporters are not allowed to leave the room until 10 am ET, and their communications with the outside world are cut off. During the lockdown, Bank of Canada officials brief journalists on key elements of the MPR.

At 11 am ET, Bank of Canada Governor Tiff Macklem and Senior Deputy Governor Carolyn Rogers hold a press conference, which typically lasts about 45 minutes. It will begin with an approximately 10-minute “opening statement” read by the Governor, which provides additional context to the rate decision. The opening statement has become an important document in recent years as the bank has used it to provide a public glimpse into the deliberations of the bank’s Governing Council (the Governor and his deputy governors) as they discussed their main concerns and they came to a decision. . This is followed by cross-examination from reporters both in the room and by participating via conference call.

Following the press conference, Mr. Macklem will conduct a pair of media interviews, one with a television outlet and one with a cable service, covering both official languages. Bank staff will also provide briefings to participants in key markets, similar to morning briefings for reporters, to provide additional information on the rate decision and MPR.

–David Parkinson

7:30 am

Is this the time the Bank of Canada changes tune?

The big question of the day is not whether the Bank of Canada will raise its policy rate again, but whether it absolutely will. What is less certain is how much. After hikes of a full percentage point in July and 0.75 percentage point in September, there was a sense that the bank might be ready to slow the pace to 0.5 percentage point, perhaps in preparation for halting hikes for a while. time in the new year. But the bank talk has hardened ahead of this decision, while inflation data has not made a convincing case for easing the rate accelerator. Markets are leaning toward another 0.75 percentage point rise, though economists are more divided.

Along with the rate increase, I will be looking for any changes in the bank’s language that might suggest it will slow down or pause. I will pay close attention to even small and subtle restatements: the bank is usually very coy about its rate outlook.

After that, the big news will be the new economic forecasts from the central bank. Since the bank’s last quarterly update in July, the outlook for global growth has deteriorated markedly. Several Canadian private sector economists are now predicting a Canadian recession next year. The Bank of Canada will certainly lower its growth projection (it’s hard not to, given the international economic climate), but how much will it lower its 2023 forecast of 1.8 percent? Will the bank start to introduce a contraction in its projections? Less than two weeks ago, Macklem was still talking about the possibility of a “soft landing,” a slowdown that doesn’t turn into a recession, though he admitted the odds of such an outcome were shrinking. Is this the moment when the bank changes tune?

With the bank’s focus squarely on the fight to reduce inflation, I’ll be looking for anything that sheds light on how you think the bank is doing. With the bank observing a blackout in public communications for eight days prior to the release of the decision and the MPR, this will be your first opportunity to share your views on the September inflation report, which Statistics Canada released last week. one week.

–David Parkinson

6:45 a.m.

Why is everyone talking about the Bank of Canada?

For most of 40 years, Canadians haven’t had to think much about the Bank of Canada. Over the past year, it has become impossible to ignore.

Inflation has risen for the first time in decades, cutting wages and eroding the purchasing power of the dollar. Monetary policy has become a hot political issue. Conservative leader Pierre Poilievre has said he will fire Bank of Canada Governor Tiff Macklem, while New Democrats leader Jagmeet Singh has begun publicly criticizing the bank’s aggressive rate hike path.

Since March, the central bank has raised borrowing costs five times, with another big rate hike expected on Wednesday. That makes it more expensive for households to get mortgages and for businesses to get loans. The housing market is unraveling, businesses and consumers are getting nervous, and a growing number of economists are predicting a recession next year.

So why is the Bank of Canada raising interest rates? What is happening with inflation? And what control over the central bank does the government have? Read our explainer.

– Mark Rendell

6:30 a.m

The Bank of Canada is expected to deliver another big interest rate hike

The Bank of Canada is set to deliver its sixth consecutive rate hike this morning, continuing to raise borrowing costs for Canadians in an effort to control inflation.

The announcement will be at 10 am ET. As of Tuesday afternoon, financial markets were pricing in a 70 percent chance that the bank would raise its benchmark policy rate by 0.75 percentage point. That would bring the policy rate to 4 percent for the first time since early 2008. Some analysts expect a move of less than 0.5 percentage point.

Governor Tiff Macklem has been unequivocal in recent weeks that interest rates must continue to rise. Consumer Price Index inflation was 6.9 percent in September, more than triple the Bank of Canada’s 2 percent target.

Headline inflation has slowed in recent months, thanks to falling gasoline prices. But a growing number of goods and services are experiencing outsized price hikes, a sign that the bank’s aggressive rate-hike campaign hasn’t curbed inflation’s momentum.

“We have yet to see a clear turning point in core inflation,” Macklem told reporters two weeks ago in his last public remarks before the rate decision. He said the economy is “overheating” and it will take a period of slower economic growth and weaker labor markets for inflation to return to target.

The bank has raised its policy rate to 3.25 percent from 0.25 percent this year in one of the fastest rate-raising cycles on record. Many analysts believe the bank is nearing the end of its rate hike campaign and will be watching for hints about future rate hikes.

The bank will also publish its quarterly Monetary Policy Report today, which will contain updated forecasts for economic growth and inflation.

Analysts expect a downward revision to growth next year. They will be watching to see if the bank continues to refer to a possible “soft landing,” a scenario in which inflation falls without a rise in unemployment or a sustained economic contraction. A growing number of private sector economists, including Macklem’s predecessors Stephen Poloz and Mark Carney, now predict that the Canadian economy will enter a recession next year.

Mr. Macklem and Senior Lieutenant Governor Carolyn Rogers will hold a news conference at 11 am ET.

– Mark Rendell

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