The Bank of Canada’s decision to raise rates another quarter point yesterday was not a huge surprise, given that inflation is still running hot, and the labour market remains unsustainably tight, but what was of particular note was that the Bank was much more clear in saying that they are more likely to hold the rate at where it is if things continue in the current trajectory—though they did also provide the caveat that if things continue to run too hot they won’t hesitate to hike rates yet again. (Here is Kevin Carmichael’s great explanation of the decision).
#cdnecon #cdnpoli housekeeping: the BoC governor said the government will amend the BoC Act to allow the central bank to retain earnings, which will be necessary to eventually repay a couple of years of losses due to COVID-era QE.
— Kevin Carmichael (@CarmichaelKevin) January 25, 2023
To cut rates *before* seeing inflation at 2% (or under) would be like one of those Bond villains putting 007 in one of their ill-designed death traps and then walking away, assuming that everything would go as planned without them watching.
— Stephen Gordon (@stephenfgordon) January 25, 2023
It is also noteworthy that the Monetary Policy Report, which explains the economic landscape and gives some insight into the Bank’s thinking, was really quite optimistic in terms of the possibility of avoiding a recession, but seeing stalled growth in the middle of the year, with a return to slower growth by the end of the year—certainly more of a soft-landing scenario. It’s not guaranteed, mind you, given global economic forces and the mood of the public, but the report was not all doom and gloom, in spite of media narratives.
I'm usually pretty optimistic, but after reading through much of the Bank's MPR this morning I'm even more so!
Easing inflation, strong labour markets, slowing but positive growth, and more. There are risks, but lots of positives here: https://t.co/CGdscQ0Zig #cdnecon
— Trevor Tombe (@trevortombe) January 25, 2023
Ukraine Dispatch, Day 337:
Weeks after both Wagner Group mercenaries and Russia forces claim they have taken the town of Soledar, Ukraine only now has started to withdraw its forces from the area, given the heavy toll it is taking as Russians and mercenaries essentially keep feeding lives into the grinder. This puts Russian forces once step closer to the strategically important town of Bakhmut. Meanwhile, Germany has indeed agreed to send its Leopard 2 tanks to Ukraine, as they were expected to.
"The way we are all working together to strengthen freedom, to defend Ukraine and Europe, is a historic achievement of the leaders who are working now." – @ZelenskyyUa pic.twitter.com/TotRnvaGbL
— Anton Gerashchenko (@Gerashchenko_en) January 25, 2023
https://twitter.com/zelenskyyua/status/1618294048187617283
I wish you to have more reasons for smiling. And you know what it takes. We all do.
You are stubborn enough. But the main thing is to have enough health. So please, be healthy! I want to smile near you forever. Give me this opportunity! 2/2— Олена Зеленська (@ZelenskaUA) January 25, 2023