Canada This Week June 3-7, 2024

The Bank of Canada will make an interest rate announcement on Wednesday.

All Eyes on the Central Bank

This Wednesday, the Bank of Canada is set to make a much-anticipated announcement on interest rates. Over the past two years, the Bank has rapidly raised rates to combat historically high inflation following the COVID-19 pandemic. Since July of last year, the key interest rate has held steady at 5%. Recently, Statistics Canada has provided insights on inflation rates and national GDP, indicating a slowdown in the economy. April's inflation rate fell to 2.7% from 2.9% in March, and the first quarter GDP growth was 1.7%, below the Bank of Canada's 2.8% estimate. These indicators suggest the Central Bank may be considering a rate cut​ (TD Stories)​​ (Global News)​.

Interest Rate Schedule since December 2022. Source: Bank of Canada

Political Implications

Federal and provincial party leaders are closely watching the Central Bank’s decision. Conservative Leader Pierre Poilievre has repeatedly called for the dismissal of Bank of Canada Governor Tiff Macklem, criticizing his reluctance to cut interest rates and his miscalculations on inflation and GDP growth. If the Bank maintains the current rate, expect Conservatives to continue their narrative that the Liberal government’s economic policies are failing and making life unaffordable for Canadians​ (Bank of Canada)​​ (Global News)​.

Provincially, premiers are likely to weigh in, having criticized the pace of rate increases and the sustained 5% rate. Many political voices argue that it’s time to lower rates to boost economic acceleration through the year's end​ (TD Stories)​​ (Global News)​.

Is Inflation Really Under Control?

The consensus is that the Bank of Canada might cut the key rate by 25 to 50 basis points this week. However, the key factor that could cause the Bank to hold steady is the inflation rate. The ideal annual inflation rate target is 2%, a long-standing policy of the Bank. Recently, the Bank has adjusted this target to a range of 2-3%. April’s inflation rate of 2.7% falls within this range but is on the higher side, raising the question of whether inflation is sufficiently under control for a rate cut​ (TD Stories)​​ (Global News)​.

Hanging in the Balance

As economists, analysts, reporters, and financial institutions speculate on the Bank of Canada’s decision, the lives of everyday Canadians are directly impacted. Statistics Canada reports that 67% of Canadian mortgages are up for renewal by the end of 2026. Delays in rate cuts could significantly affect a majority of Canadian homeowners in the coming months​ (Bank of Canada)​​ (TD Stories)​.

Stay tuned as the Bank of Canada’s announcement on Wednesday could signal pivotal changes for the Canadian economy and political landscape.

Five Years On: Assembly of First Nations Chief Criticizes Slow Progress on Addressing Missing and Murdered  Indigenous Women and Girls Crisis

On the fifth anniversary of the national inquiry's report into missing and murdered Indigenous women and girls, Cindy Woodhouse Nepinak, the national chief of the Assembly of First Nations, expressed deep frustration with the slow progress by all levels of government in addressing the crisis. Despite over 150 calls to action specifically aimed at First Nations people, only two have been implemented since 2019.

Advocates have continuously called for increased funding for Indigenous housing, justice, and programs for LGBTQ individuals, which they believe are crucial for enhancing the safety of women and girls. The 2019 inquiry highlighted that Indigenous women are 12 times more likely to go missing or be murdered than non-Indigenous women, presenting 231 calls to action to combat this epidemic.

The report, which was the result of testimonies from over 2,380 family members, survivors, experts, and knowledge-keepers, outlined the multifaceted causes of the crisis, including intergenerational trauma, poverty, and the displacement of women from their traditional roles due to colonization.

Woodhouse Nepinak emphasized the need for monumental steps to end and redress what she referred to as genocide, matching the scale of the colonial systems that have perpetuated violence against Indigenous women for generations. She criticized the inaction of governments, urging them to commit to meaningful changes based on justice and human rights, with a focus on survivors and their families.

In her appeal, Woodhouse Nepinak called on Canadians to support these efforts and hold their governments accountable for addressing this ongoing crisis.

The inaction of the Trudeau government on implementing the report’s recommendation could be politically damaging as it now seems Trudeau is failing on social policy, as strong point for the government, in addition to economic policy.

Commuter Chaos on Horizon? TTC Strike Looms

Toronto faces the possibility of its first TTC strike in 16 years, potentially starting Friday, if ongoing negotiations between transit officials and the Amalgamated Transit Union (ATU) Local 113 fail to reach an agreement. The strike could lead to a total shutdown of the city's bus, streetcar, and subway services, impacting nearly 2.5 million daily commuters.

Union leaders and TTC officials have been in talks since February to replace an agreement that expired on March 31. The main issues in the negotiations include wages, job security, and benefits. Recently, the union rejected a four-year TTC offer with annual raises of 3.75%, 3.5%, 3.5%, and 3%, instead seeking a three-year deal with hikes of 7%, 6%, and 5%.

A previous contract saw a 2% annual wage increase over three years. The potential walkout by the TTC's 12,000 front-line employees could lead to severe gridlock and congestion in the city. Despite the challenges, both sides remain at the negotiating table, with TTC chair Jamaal Myers expressing confidence that a deal can be reached.

Union president Marvin Alfred criticized the conditions attached to the TTC's offers, noting the frustration among members who kept the city moving during the pandemic and were deprived of the right to strike for 13 years. The union regained this right last year following a court ruling.

The TTC has contingency plans for a strike, but acknowledges the potential devastating impact on the city. Mayor Olivia Chow remains optimistic about reaching a solution. Negotiations are ongoing, with a significant gap remaining on wage increases, and both sides understanding the high stakes of a potential work stoppage.

As the deadline approaches, Toronto awaits the outcome, hoping to avoid the disruption reminiscent of the brief but impactful 2008 strike.