North America

Inflation in Canada remains "too high" but is headed in the right direction, a Bank of Canada official said on Tuesday, adding that the central bank will do whatever is needed to bring price increases back to target, Reuters reported. Deputy Governor Paul Beaudry, speaking to university students in Waterloo, Ontario, said while some have suggested a recession might be needed to tame climbing prices, the central bank believed it could lower the risk of a hard landing by clearly communicating its intentions. "In August, inflation stood at 7%.

Canada's annual inflation rate eased more than expected in August even as food prices rose at their fastest pace in 41 years, data showed on Tuesday, with economists saying now smaller rate hikes may be best, Reuters reported. The country's annual inflation rate slowed to 7.0% in August, below analyst forecasts of 7.3% and down from 7.6% in July. The deceleration was largely due to lower gasoline prices and slower gains in the shelter index, Statistics Canada said. On the month, the consumer price index fell 0.3%, the largest decline since early in the COVID-19 pandemic.

Canadian Prime Minister Justin Trudeau announced C$4.5 billion ($3.43 billion) in measures on Tuesday intended to provide relief from high inflation to low-income families, Reuters reported. The measures include doubling a quarterly tax credit sent to individuals and families with low and modest incomes to offset sales tax, and a C$500, onetime top-up to a housing benefit that is provided to low earners who need help with rent, Trudeau said. Trudeau's Liberal government will also provide up to C$650 per year for dental care to children under 12 who do not have access to dental insurance.

The United States on Wednesday announced that it would transfer $3.5 billion in Afghan central bank assets into a new Swiss-based trust fund that will be shielded from the Taliban and used to help stabilize Afghanistan's collapsed economy, Reuters reported. The Afghan Fund, managed by a board of trustees, could pay for critical imports like electricity, cover debt payments to international financial institutions, protecting Afghanistan's eligibility for development aid, and fund the printing of new currency.

Bankruptcy Judge Michael Wiles on Friday approved a $700 million financing package for SAS AB from Apollo Global Management, though he said features of the deal concern him, Bloomberg News reported. The financing, divided into two $350 million draws, will allow Apollo to convert the debt into stock in the bankrupt airline or participate in an equity raise tied to SAS’s eventual exit from chapter 11 protection under certain circumstances. Judge Wiles called the financing “unusual” and questioned whether it was legally viable.

Canadian Prime Minister Justin Trudeau is set to unveil measures to provide inflation relief to low-income families, a government source said, confirming reports in domestic media, Reuters reported. Inflation eased to 7.6% in July from an almost four-decade high of 8.1%. But the Bank of Canada is still concerned about rising prices and is promising further interest rate hikes after increasing them to their highest level in 14 years on Wednesday.

More than a year after the Great Resignation took hold in the United States, Canada is grappling with its own greyer version: The Great Retirement, Reuters reported. Canada's labor force grew in August, but it fell the previous two months and remains smaller than before the summer as tens of thousands of people simply stopped working. Much of this can be chalked up to more Canadians than ever retiring, said Statistics Canada. It is not just the 65-and-over crowd packing up their offices and hanging up their tool belts.

During the second quarter of 2022, consumer insolvency rose to its highest level since the start of the pandemic, according to Equifax Canada, MPAMag.com reported. Consumer proposals went up by 20.7% annually in Q2, accounting for approximately 76% of all insolvencies in Canada. Delinquency rates in 90 day+ accounts also had a 4% increase, Equifax said.

Cineworld Group Plc filed for bankruptcy in Texas in an effort to tame its $5 billion debt pile, Bloomberg News reported. The UK-based movie theater chain, which draws most of its revenues from the U.S. after the acquisition of Regal Cinemas in 2018, yesterday filed for chapter 11 protection. Cineworld has commitments for $1.94 billion of bankruptcy financing lined up from existing secured lenders, the company said in a statement. The company’s management and board of directors will remain in control of the business.

The Bank of Canada delivered a fourth consecutive outsized interest-rate hike in a bid to slow the nation’s economy and drag inflation down from four-decade highs, Bloomberg News reported. Policy makers led by Governor Tiff Macklem raised the benchmark overnight rate by 75 basis points to 3.25% on Wednesday, giving Canada’s central bank the highest policy rate among major advanced economies. Officials said they expect to continue raising rates in coming months.