A prominent Ottawa business expert is predicting a wave of bankruptcies in the coming months as surging prices at gas pumps and grocery stores prompt Canada’s central bank to further raise its benchmark interest rate in a bid to put the brakes on inflation, the Ottawa Business Journal reported. Ian Lee, an associate professor at Carleton University’s Sprott School of Business, expects the Bank of Canada to impose “multiple” interest rate hikes this year as it tries to rein in an annual inflation rate that climbed to 5.7 percent in February, its highest level since August 1991.
Read more
A commodities rally sparked by Russia's invasion of Ukraine will push Canadian inflation higher for longer, with the headline rate now seen peaking at or above 6%, forcing the central bank to raise interest rates more aggressively, economists told Reuters. Canada's inflation rate has already surged well above the 5.1% that the Bank of Canada forecast for the first quarter in January, highlighting the tough road ahead to get price growth back down to the 2% target.
A group of five banks led by Royal Bank of Canada is stuck holding $1.7 billion of loans for software company SS&C Technologies Holdings Inc. after falling debt prices forced the postponement of the offering to investors on Wednesday, Bloomberg reported. The deal was pulled because of market conditions, according to a person with knowledge of the matter. The banks canceled a planned call with lenders — the official start of the marketing process — prior to its scheduled 10 a.m. start in New York.
An Alberta, Canada, trucking company specializing in fluid transportation for the oil sector is seeking credit protection as it faces over CA$3 million ($2.3 million) in debt to dozens of companies and the country’s tax authority, FreightWaves reported. Prairie Tech Oilfield Service, based in Elk Point, filed a notice in the Court of Queens Bench of Alberta on Feb. 22 that the company is insolvent and intends to make a proposal to its creditors under Canada’s Bankruptcy and Insolvency Act.
As the Russia-Ukraine crisis propels crude oil to its highest level in 14 years, the historic link between the Canadian dollar and energy prices has weakened, leaving the Bank of Canada with one less tool to fight inflation, Reuters reported. The normal tight relationship between the Canadian dollar and oil has typically meant the central bank could rely on a stronger currency to ease inflation pressures brought on by higher energy prices. Gains for the loonie would reduce the cost of Canada's imports.
Read more
The Bank of Canada lifted interest rates by a quarter percentage point and signaled more hikes are coming as it starts to wrestle inflation down from a three-decade high, Bloomberg News reorted. Policymakers led by Governor Tiff Macklem increased the benchmark overnight rate to 0.5% at a decision Wednesday in Ottawa, in a widely expected move. Officials also said they expect to raise borrowing costs by more because of elevated inflation pressures, but refrained from starting a run off of the banks holdings of government bonds.
Read more
The Canadian economy mostly likely started 2022 on a strong footing, despite the impact of the Omicron variant of the coronavirus, while fourth-quarter growth came in above expectations, official data showed on Tuesday, Reuters reported. Canada's economy grew 6.7% in the last three months of 2021 on an annualized basis, beating analyst forecasts of 6.5%, while gross domestic product in January most likely rose 0.2% after stagnating in December, Statistics Canada data showed. The strong fourth-quarter print came in above the Bank of Canada's own forecast in January of a gain of 5.8%.
Read more
Canada's Ontario province on Monday will introduce legislation to establish a minimum wage and other rights for gig economy workers such as drivers for ride-hailing companies, Premier Doug Ford said, Reuters reported. The legislation, which Ford called a first for a Canadian province, includes clarity around hours and pay calculations. It also includes protection against dismissal from a digital platform without proper notice or explanation, and ensure tips that workers earn remain with them, Ford told reporters.
Read more
The United States Trade Representative's (USTR) office said on Tuesday it opposed Canada's plan to enact a digital services tax (DST) and urged Canada to abandon plans for such a step, Reuters reported. "The United States urges Canada to abandon any plans for a unilateral measure and instead redouble its commitment to the rapid implementation of Pillar One of the October 8 OECD/G20 agreement and the negotiation of a multilateral convention", the USTR office said in a statement.
Read more
Canadian retail sales most likely rose 2.4% in January from December, preliminary data from Statistics Canada showed on Friday, following on a 1.8% decline in December as consumers stayed home amid concerns over the Omicron coronavirus variant, Reuters reported. Retail sales totaled C$57.05 billion ($44.91 billion) in December, down from C$58.06 billion in November. For full year 2021, retail sales came in at C$674 billion, an all-time record, Statscan said. In December, sales were down in eight of 11 subsectors, representing 41.7% of retail trade.
Read more