Tag Archives: Bank of Canada

Roundup: A big economic week ahead

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It’s going to be a very big week in Canadian economics: Today is the day the Bank of Canada has their mandate to target inflation between one and three percent at an average of two percent gets renewed, with some additional language around employment in there (but not a dual mandate). Then Tuesday will be the government’s fiscal update, which isn’t expected to announce too many new things because there simply isn’t time for a budget implementation bill to accompany it. And then Wednesday, Statistics Canada will release the inflation figures for November, and it there remains a possibility it could go higher still before being expected to cool down by mid-next year. Because it’s largely about supply chains, and as the former governor of the Bank of Canada keeps reminding us, it’s not about the political situation or fiscal policy. The counterfactual is that if the government didn’t spend on pandemic supports and the Bank didn’t engage in quantitative easing, we would be in a deflationary depression cycle, and that would have left us all worse off.

With this in mind, here is economist Kevin Milligan with some added context:

https://twitter.com/kevinmilligan/status/1470099272632733696

https://twitter.com/kevinmilligan/status/1470100800261132288

https://twitter.com/kevinmilligan/status/1470102174076006401

https://twitter.com/kevinmilligan/status/1470103387714637827

https://twitter.com/kevinmilligan/status/1470104572261638146

https://twitter.com/kevinmilligan/status/1470105479288262657

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QP: Demanding the inflation target

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With the prime minister virtually attending Biden’s “democracy summit,” and Chrystia Freeland absent, it was promising to be a rockier day in the Commons. Erin O’Toole led off, his script on his mini-lectern, and he brayed about inflation, housing prices, and coming interest rate hikes. Ahmed Hussen reminded him that they were the federal party that restored leadership to the housing file and he praised the National Housing Strategy. O’Toole raised the prospect of predicted food price hikes, and then pretended that Trudeau and Freeland were in the Chamber and not answer, and Randy Boissonnault, in his role as associate finance minster, reminded O’Toole about the Bank of Canada’s inflation target. O’Toole pretended that the prime minster ignored his responses about the Bank’s mandate and worried it would be changed, to which Boissonnault reminded him that the Bank is independent. O’Toole switched to French to misleadingly say that the Liberals planned to abandon the inflation targeting mandate, and Hussen repeated his first response, and called out the nonsense in the Conservatives’ supply day motion. O’Toole returned to braying about inflation in French, and Boissonnault repeated in French about the Bank’s mandate, before reciting some good news talking points.

Alain Therrien led for the Bloc, and he worried that the Auditor General showed that thirty percent of COVID tests were lost or mislabelled, for which Duclos said that he thanked the AG for her work, and said they would examine the results. Therrien worried about the stat that fourteen percent of those tested were never notified, but Duclos gave a bromide about working to prevent omicron.

Jagmeet Singh rose for the NDP, and after citing a report on growing inequality (I would be dubious of that given that the Canadian trajectory has not been the same as the US), and he demanded a tax on the super-wealthy, for which Boissonnault listed measures to help those in need. Singh repeated the question in French, and Boissonnault read measures in the Liberal platform about taxing banks and insurance companies.

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Roundup: Rejecting the compromise for more theatre

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In spite of the Liberals proposing a compromise on the release of the Winnipeg Lab documents last week, the Conservatives have rejected the offer, citing that it was “months late,” and that the “will of parliament has not changed.” But this is wholly disingenuous—they did offer another compromise in June before Parliament rose for the summer, and Parliament dissolved before the challenge to the order could reach Federal Court, which may have settled the outstanding question of whether the Security of Information Act fettered parliamentary privilege or not.

This rejection makes it clear that this is not about the information—it’s about political theatre. If it was about the information, they would have let NSICOP review the documents and report back. But no—they first came up with the fiction that they didn’t trust security-trained public servants to properly redact the documents, and then they came up with the fiction that the prime minister redacts NSICOP reports, which he does not and never did, and handwaved about only trusting the Commons’ Law Clerk—who doesn’t have the training or context around national security to know what is a necessary redaction or not—to do redactions. (They also piled onto the same law clerk the redactions from pandemic documents for the health committee in the previous parliament, overloading his office and ensuring that they would never see all of the requested documents). The government provided avenues for the documents to be released, but the Conservatives have consistently decided that theatre was more important (particularly as they fed the “mystery” of these documents into conspiracy theories).

We’ll see how much patience the other parties have for this nonsense—and at this point, it is most definitely nonsense. They were happy enough to embarrass the government pre-election, so we’ll see if they still have the appetite to do so now. But at this point, this no longer has any bearing on accountability or being serious about national security. This is one hundred percent about political theatre, and it would be great if the pundit class of this country could call it out for what it is.

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QP: Shouting about the Bank of Canada’s mandate

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Less than two hours after the prime minister announced that Canada would be engaging in a diplomatic boycott of the Beijing Olympics, he was present along with his deputy for QP. Erin O’Toole led off, script in front of him, and he lamented that there was no decision on Huawei and that Canada was the “last one” to announce the diplomatic boycott of the Olympics. Justin Trudeau have a paean about standing up for human rights and doing what is right. O’Toole then pivoted to uninsured mortgages and worried that interest rates would soon be rising and blamed the government for letting inflation run rampant—which doesn’t make any sense because rates were going to go up anyway and they are unnaturally low and them rising toward a neutral range would be a good thing. Trudeau reminded him that they had a plan around housing while the Conservatives only promised a tax break for landlords. O’Toole railed about inflation and demanded the government mandate the Bank of Canada maintain the Bank of Canada’s two percent inflation target, and Trudeau said they would renew it and then pointed that the Conservatives plans did nothing for affordability. O’Toole started yelling about inflation, and Trudeau shrugged this off as flailing. O’Toole switched to French to ask again that they renew the Bank’s inflation target, and this time Trudeau said that an announcement was forthcoming. 

Yves-François Blanchet rose for the Bloc, and he complained that border measures were too confusing, and Trudeau said that he understood that the new rules could be confusing but they were doing everything they could to keep Canadians safe. Blanchet gave a hypothetical travel plan and wondered to know what tests or constraints they would be subjected to, and Trudeau said that anyone travelling should consult with public health authorities, but they needed to protect Canadians. 

Jagmeet Singh led for the NDP, and he complained about housing and claimed the government has to tools to solve it — erm, except nothing immediately short of a Green Lantern ring. Trudeau praised the efforts that the government has been taken and are expanding. Singh complained in French that the government wasn’t building housing on federal lands in Montreal and accused Trudeau of giving it to a member of the Bronfman family. Trudeau lamented that he expected personal attacks from the Conservatives but not the NDP, before talking about partnering with Montreal.

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QP: Litigating the Kabul evacuation

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The Liberal benches were a little over two-thirds full, the opposition benches a little more full than that, and both Trudeau and his deputy were present (Freeland having previously being scheduled to only attend virtually but she was present in the flesh). Erin O’Toole led off, script on his mini-lectern, and he insisted that the government had two years to evacuate our interpreters and workers in Afghanistan, quoted a CSIS report, and railed at the government’s failure. Trudeau insisted that they stood by Afghanistan, and noted their commitment to resettle 40,000 Afghans. O’Toole noted that 1,215 Canadians left in Afghanistan when evacuation operations ended, and Trudeau praised the work to get as many Afghans and Canadians out of the country as possible in August. O’Toole read scoffing remarks from script, and complained that the election was called, while Trudeau reminded him of the speed at which things happened in Afghanistan before once again praising the work of officials on the ground at the time. O’Toole switched to French, and he repeated his first question on the alleged two-year timeline, and Trudeau repeated about the work to get people out, and work with the international community to resettle 40,000 Afghans. O’Toole then read the scripted scoffing remarks in French, and Trudeau repeated his same answer.

Yves-François Blanchet led for the Bloc, and he worried about a potential rule change that would see oil sands tailing ponds being dumped into the Athabasca River. Trudeau read a script about consultations on regulatory changes to ensure safeguards. Blanchet accused the government of being so much in the pockets of the oil and gas industry that it would cause the Conservatives an identity crisis, and a Trudeau read again that they were putting in strict water quality measures in the region.

Jagmeet Singh rose for the NDP, raised the coming fiscal update and the scourge of inflation, and then demanded the puzzling tools of immediate housing supply and lowering cellphone bills—a very curious notion that ignores the causes of this current bout of inflation. Trudeau read a script about what they planned to talk about in the fiscal update. Singh repeated the question in French, and got the French version of the same script.

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QP: From solemn moment to clown show

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Following every party’s statements and a moment of silence for the anniversary of the massacre at École Polytechnique, things got underway in earnest. While the prime minister was absent, Chrystia Freeland was present. Candice Bergen led off, script on her mini-lectern, and she asked for an update on the government’s programmes to combat violence against women. Freeland highlighted the importance of the day, and spoke about the “unprecedented” investments in the budget, and then called on all women in the a House to rise for a moment to remember those women. Bergen then pivoted to the topic of inflation and wanted to know what was happening with the Bank of Canada’s inflation target, and Freeland assured her the decision was coming in due course. Bergen was not satisfied, and demanded action on rising prices—though she did not call for price controls. Freeland assured her that they understand the difference between fiscal and monetary policy, and have confidence in the Bank, and that they don’t disparage them like the Conservatives do. Alain Rayes took over in French, and demanded a “concrete plan” to tackle inflation. (Like price controls?) Freeland listed off global inflation figures in response. Rayes repeated his demand for a “concrete plan,” and Freeland responded with praise for the GDP growth and job numbers.

Claude DeBellefeuille also raised the anniversary of École Polytechnique and the current spate of gun violence in Montreal and demanded tougher gun control. Marco Mendicino assured her the are working together with different governments to ensure that everyone can live safely. DeBellefeuille accused the federal government of doing nothing, and Mendicino repeated his assurances and brought up his meetings last week with gun control advocates.

Alexandre Boulerice rose for the NDP, and he raised the scourge of opioid deaths, and demanded decriminalisation of simple possession of drugs. Jean-Yves Duclos noted that they are working at several levels around things like safe supply and support for users, with more to be announced shortly. Gord Johns repeated the demand in English, and Carolyn Bennett repeated Duclos’ answer in English.

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Roundup: Blockbuster jobs numbers—mostly

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Statistics Canada released the Labour Force Survey numbers yesterday, and they were very good—four times as many jobs were created as had been forecast by economists. All of the jobs lost during the pandemic have been recovered and more, and unemployment is very nearly as low as it was before the pandemic began (at which point we were at record lows, around statistical “full employment”), and it was even noted that “core-aged” women had their highest ever employment levels. Things are turning around. Mostly.

There are still a lot of vacancies and there is a mismatch between jobs available and the skills that unemployed workers possess, and while the government is pouring money into training, that takes time. And labour shortages mean wages are likely to continue to increase (and if anyone says they’re stagnant, they are either lying or haven’t read the data). As well, productivity has taken a dive over the last quarter, so that will matter as well. Conservatives are claiming that the increase in jobs is as a result of the majority of pandemic benefits ending, but I’m not sure there is a direct comparison that can be made given the skills mismatches that are in the economy (and which pre-date the pandemic, which was one of the reasons why the Bank of Canada, among others, was making a concerted effort to call for inclusive growth). There is work still to do, but the government is feeling pretty good about the data.

Meanwhile, here are some economists’ takes to consider:

https://twitter.com/stephen_tapp/status/1466766974365622275

https://twitter.com/kevinmilligan/status/1466771813594140675

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Roundup: Who they gave succour to

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Cast your minds back to summer of 2018, when prime minister Justin Trudeau attended a Liberal rally in rural Quebec and encountered a woman heckling him about refugees crossing the border at irregular points of entry. As part of this, she demanded to know when Trudeau would support “Québécois de souche,” a term tinged with racism as it applies only to those who descended from the early French settlers, essentially considering anyone without those particular roots to be some kind of contagion upon the state. Trudeau called out her intolerance, and she tried to sue for defamation.

A Quebec Superior Court judge dismissed her case, and pointed out the fact that she had tried to use the incident to make a name for herself among far-right circles, all while claiming that she has empathy because she’s a nurse, and will treat anyone. More to the point, the judge pointed out that she was deliberately trying to provoke the prime minister, and was thus the author of her own misfortune, and in dismissing the case, ordered her to pay legal fees.

So why bring this up? Because if you also think back to when the House of Commons returned shortly after this incident, the Conservatives all rushed to give succour to this woman, and tried to frame her aggressive questions and demands as though she was “just asking about the budget.” No, seriously. Conservative after Conservative stood up in the House of Commons to whine that “if Trudeau doesn’t like your questions, he calls you a racist.” Because in their minds, being called a racist is a worse crime than the actual racism that the woman was displaying. And it goes to show what the party is willing to stand up for, and who they are willing to protect if they think they can score points from it.

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QP: You should read a book or two

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While the prime minister was in town, he was not in Question Period today, but his deputy was, so all was not lost. Candice Bergen led off, script in front of her, and she went off on inflation, accusing the finance minster of printing money so that she never runs out of bucks to pass. Chrystia Freeland read contradictory statements from different Conservative and wondered who was right. Bergen selectively quoted economists to assign blame for inflation. Freeland quoted former Bank of Canada governor Stephen Poloz that government spending is not the problem. Bergen was apoplectic and demanded federal action on inflation, to which Freeland again quoted Poloz, and then suggested the Conservatives read a book or two. Alain Rayes took over, and asked about the labour shortage in Quebec. Marco Mendicino, even though it’s no longer his file, reminded him they have been working with Quebec and hit a record high of temporary foreign workers. Rayes went another round, and got the same.

Luc Therrien led off for the Bloc, and raised the Environment Commossioner’s report, and then demanded the government cap the production of fossil fuels. Stephen Guilbeault appeared by video, and reminded him that the Commissioner’s report didn’t capture several new programmes from the government. Therrien was not mollified, and in response, Guilbeault listed measures they have taken that no other government has taken.

Don Davies rose for the NDP, and demanded that the government support lifting patent restrictions on vaccines manufacturing to help the developing world avoid new variants. Harjit Sajjan read about the government’s vaccine donations. Niki Ashton repeated the question in French over video, and François-Philippe Champagne reminded her of Canada’s support for COVAX and other initiatives to deliver vaccines.

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Roundup: Some more inflation fact-checking

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Because you know it’s going to come up yet again during Question Period today and through the rest of the week, here are a couple of reality checks around inflation, first from former Bank of Canada governor Stephen Poloz, who will give you all of the reasons why the pandemic spending and stimulus is not what is causing the current bout of transitory inflation.

Next, from economist Stephen Gordon:

So when Erin O’Toole and Pierre Poilievre start sounding off on inflation again, I know whose economic judgment I’ll be listening to (and it won’t be theirs).

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