Interest rates in Canada may have to stay restrictive for longer to ensure inflation declines to the Bank of Canada's 2% target, Governor Tiff Macklem said on Wednesday, Reuters reported. Macklem, speaking after the bank announced that it was holding its key rate at 4.50%, said the central bank's governing council had discussed whether rates had been raised enough. Macklem said that while the bank was encouraged inflation was dropping, the job of monetary policy was not done.
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The Bank of Canada is expected to take in stride surprising recent economic strength and leave interest rates unchanged at its meeting on Wednesday, pinning its hopes on activity cooling as higher borrowing costs sink in, analysts said, Reuters reported. Last month, the Bank of Canada became the first major global central bank to pause its rate-hiking campaign, after lifting its benchmark rate to a 15-year high of 4.50%. It said no further tightening would be needed if the economy slows, or even moves into a slight recession, as it expects.
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Canadian dealmakers are optimistic about a return to strength in the second half of the year after mergers and acquisitions (M&A) in the first quarter dropped to pandemic levels, belayed by higher borrowing costs and panic around a banking crisis, Reuters reported. The collapse of regional banks Silicon Valley Bank and Signature Bank in the U.S. tightened credit market making funding difficult for deals.
Turns out, the biggest short in the banking industry anywhere in the world isn’t in Switzerland or Silicon Valley, but rather in the relatively tame financial center of Canada, Bloomberg reported. In recent weeks, short-sellers have upped their bearish bets against Toronto-Dominion Bank, and now have roughly $3.7 billion on the line vis-à-vis Canada’s second-largest lender, according to an analysis by S3 Partners. That’s the most among financial institutions globally and puts TD ahead of the likes of France’s BNP Paribas SA and Bank of America Corp.
The Bank of Canada was concerned about inflation sticking above its 2% target and agreed there might be a need to tighten monetary policy further when officials decided to leave rates on hold this month, Reuters reported. On March 8, the bank became the first major central bank to pause its tightening campaign, leaving the key overnight interest rate on hold at 4.50%.
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Canada's inflation rate slowed more than expected in February to its lowest level in 13 months, data showed on Tuesday, backing up the central bank's plans to hold off on further interest rates hikes, Reuters reported. The annual inflation rate fell to 5.2% in February from 5.9% in January, the biggest single-month decline in almost three years, Statistics Canada said. That beat a median analysts' forecast for a decline to 5.4%. Excluding food and energy, prices rose 4.8% versus a year ago compared with a 4.9% increase in January.
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Canadian holidaymakers jetting south for spring break on red-eye flights with Flair Airlines Ltd were in for a surprise on March 11 when the Boeing Co. 737s they were about to board were seized by agents acting on behalf of a jet leasing firm that manages the planes, Bloomberg News reported. The episode emerged from a $50 million lawsuit filed by Flair in the Ontario Superior Court of Justice, in which the budget carrier alleges Airborne Capital Ltd.
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Canada's competition watchdog called for stronger merger review rules on Wednesday and recommended some 50 improvements to what it said was outdated antitrust legislation, Reuters reported. "Canada needs more competition. And Canadians need a modern and effective competition law to support that," the Competition Bureau said in a statement. Canadians have been left with fewer and pricier choices in everything from telecoms to banking after decades of industry consolidation, consumer advocates say. Soaring inflation has worsened the issue of affordability.
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Canada’s banking regulator seized control of SVB Financial Group’s branch in the country Sunday and said it will seek a legal order to wind up the operation, Bloomberg News reported. Peter Routledge, the country’s financial superintendent, “took this action to preserve the value of the assets held at the branch” after US regulators shut down the California-based parent bank on Friday, his office said in a statement. Finance Minister Chrystia Freeland spoke with banking executives and Bank of Canada officials on Sunday evening, and said the government continues to watch the situation.
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Loyalty Ventures Inc. filed for bankruptcy Friday, blaming its financial problems largely on its 2021 spinoff from its parent company, a move that it said left the new business with substantial debt and limited cash flow, WSJ Pro Bankruptcy reported. The Dallas-based loyalty-programs operator filed for chapter 11 in the U.S. Bankruptcy Court in Houston and said it plans to sell its customer-rewards programs including its Air Miles Reward Program, a loyalty program popular in Canada, and its Europe-based BrandLoyalty program for grocers and other retailers.
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