Canada

Canadian businesses still see inflation running high before edging down slowly, the Bank of Canada said on Friday in a second quarter survey at a time when labor market and wage pressures are seen easing, Reuters reported. Most businesses expect to hire over the next year, but fewer than in the first quarter and about half the number of a year ago. Those seeking to hire expect a labor shortage to be less intense than in previous quarters.

The Bank of Canada's move to come off the sidelines after a five-month pause has sent a signal that some economic pain will be needed to tame stubborn inflation, leading investors to raise bets on a hard landing for the economy, Reuters reported. The central bank is worried that the Canadian economy is running too hot for inflation to return to its 2% target and that if it waits to act, inflation expectations could rise, making matters worse. Immigration, a key source of strength for the economy, is growing at a record pace.

The general secretary of Canada Soccer insisted on Monday evening that the organization was not considering bankruptcy, contradicting news reports it was mulling the move to escape the dire financial straits it has been in since the men’s national team qualified for last year’s FIFA World Cup, the Globe and Mail reported. “Absolutely, unequivocally, we are not contemplating bankruptcy,” said Jason deVos, during an interview with The Globe and Mail.

Canadian inflation slowed to its weakest pace in two years and core measures edged lower, reducing pressure on the central bank for another interest-rate hike next month, Bloomberg News reported. The consumer price index rose 3.4% in May from a year ago, the smallest increase since June 2021, Statistics Canada reported Tuesday in Ottawa. That matched the median estimate in a Bloomberg survey of economists and was down a full percentage point from 4.4% in April. On a monthly basis, the index rose 0.4%, also matching expectations.

The Bank of Canada agreed that the need for further rate hikes would be determined by fresh economic data after it lifted rates to a 22-year high earlier this month, minutes from their policy meetings released on Wednesday showed, Reuters reported. Analysts said the tone of the notes made it clear the central bank was likely to raise rates again next month. On June 7 the bank, which had been on hold since January, raised its overnight rate to 4.75%. In its summary of deliberations, or minutes, the governing council said growth and inflation had been stronger than expected.

Canadian retail sales grew much more than expected in April and will likely post another gain in May, data showed on Wednesday, bolstering the chances that the Bank of Canada will raise rates again in next month, Reuters reported. Retail sales climbed 1.1% in April, higher than a median forecast for a 0.2% increase, Statistics Canada said. In a preliminary estimate, Statscan said sales increased by another 0.5% in May.

Canada's financial regulator on Tuesday said that it was raising the amount of capital the country's biggest lenders must hold as a stability buffer by 50 basis points to 3.5%, citing stresses on the financial system, Reuters reported. The Office of the Superintendent of Financial Institutions (OSFI) in a statement said the change would come into effect on Nov. 1. The statement cited concerns over high household and corporate debt levels, the rising cost of debt, and increased global uncertainty around fiscal and monetary policy.

Canada's national statistics agency on Tuesday revealed new weights for the basket of goods and services in its Consumer Price Index, giving more prominence to changes in the prices of food and gasoline, Reuters reported. The reweighting, which Statistics Canada carries out every year, has historically had only a marginal impact on the headline number. The new basket weights will be applied to May's inflation data, due out on June 27. The rebalancing reflects changes in 2022 compared to 2021.

Nearly two-thirds of Canadians say higher borrowing costs are squeezing their pocketbooks, a result that’s at odds with a recent rebound in household consumption, Bloomberg News reported. Some 64% of Canadians say higher interest rates are having a negative or somewhat negative impact on their personal spending, according to a Nanos Research Group survey conducted for Bloomberg News. Another 28% said there was no impact, while 6% said the impact was positive. The survey may raise questions about why a spending slowdown hasn’t yet shown up in the data.

Prime Minister Justin Trudeau’s government stopped Canada’s work with the Asian Infrastructure Investment Bank while it investigates claims the institution faces substantial interference from the Chinese government, Bloomberg News reported. “Canada will immediately halt all government-led activity at the bank,” Finance Minister Chrystia Freeland told reporters Wednesday in Ottawa.