Canada

Prime Minister Justin Trudeau’s government will propose a tax on corporate stock buybacks in an effort to encourage companies to invest in domestic operations and workers, Canadian Press reported, Bloomberg News reported. The story, which cited an unnamed government official, didn’t elaborate on the plan that will be part of Finance Minister Chrystia Freeland’s budget update on Thursday. A person familiar with the document told Bloomberg News the report was accurate, without providing additional details.

The Bank of Canada has not ruled out another oversized interest rate hike to fight sky-high inflation, governor Tiff Macklem said on Tuesday, acknowledging Canadians feel "ripped off" by fast rising prices, Reuters reported. Macklem, answering questions in the Senate's banking, trade and economy committee, said that while the central bank is starting to see signs rate increases are slowing the economy, it is still in excess demand.

The Bank of Canada on Wednesday said it would take a flexible, risk-based approach in its nascent role as a digital payment regulator, aiming to ensure confidence in the safety and reliability of the fast-growing electronic payment segment, Reuters reported. The central bank became the regulator for payment service providers (PSPs) like card networks, digital wallets and money transfer services under Canadian law last year. It is now working with the federal government on setting out how that supervision will work.

Court documents released this week outline a long-term borrowing agreement between Laurentian University and the provincial government to replace $35 million in bridge loans taken out by LU during its insolvency, Sudbury.com reported. In early 2021, Laurentian declared insolvency and filed for creditor protection under the Companies’ Creditors Arrangement Act (CCAA), making widespread cuts to its programs and employees in April of that year. The university hopes to exit the CCAA in November after creditors voted in favour of a debt plan.

Canada’s economic growth rate fell by half in the third quarter, ahead of what’s expected to be an even sharper downturn later this year, Bloomberg News reported. Preliminary industry-based data show gross domestic product expanded 0.1% in September, Statistics Canada reported Friday in Ottawa. That followed an unexpected gain of 0.1% in August, versus a flat reading expected by economists for that month. Overall, the pace of monthly gains was enough to produce annualized growth in the third quarter of 1.6%, according to an initial estimate from the statistics agency.

The Bank of Canada announced a smaller-than-expected interest rate hike on Wednesday and made clear more increases were still needed, even as it forecast the economy could soon slip into a slight recession, Reuters reported. The central bank increased its policy rate by half a percentage point to 3.75%, a 14-year high but coming up short on calls for another 75 basis points move. It has lifted rates by 350 basis points since March, one of its fastest tightening cycles ever.

Canada's annual inflation rate edged down but exceeded forecasts in September while underlying price pressures were largely unchanged, data showed on Wednesday, amplifying calls for another hefty rate hike by the central bank next week, Reuters reported. Inflation was 6.9%, ahead of forecasts of 6.8% and down from 7.0% in August. Excluding food and energy, prices rose 5.4% from 5.3% in August.

Canada is still one of the only developed countries that U.S. politicians can look to for guidance on how to go fully legal. Official data shows that four years after opening up on Oct. 17, 2018, one-third of Canada’s cannabis sales still happen in the black market, the Wall Street Journal reported. That’s hardly ideal, but the situation is improving as legal sellers do a better job at attracting customers. In Ontario, cannabis costs just 2% more than what is available in the illegal market, according to an EY report. Investors have been razed, though.

Business sentiment has softened in Canada and most firms now think a recession is likely, a Bank of Canada survey showed on Monday, but inflation expectations remain high, leaving the central bank little choice but to continue raising rates, Reuters reported. The bank's Business Outlook Survey showed 77% of firms see price growth staying above 3% for the next two years. A separate survey showed near-term consumer inflation expectations at record highs, though longer term expectations have eased, providing some relief.