Economy

Canadians face ‘inflation isolation’ amid high costs and rate hikes

Published

5 months ago

November 28, 2023

Canadians face 'inflation isolation' amid high costs and rate hikes

An Ipsos survey commissioned by MNP LTD has shed light on a growing trend among Canadians termed “inflation isolation,” where individuals are increasingly staying home to manage the financial strain from rising living costs. This behavior is a direct response to the country’s economic pressures, which have been mounting since the Bank of Canada’s aggressive interest rate hikes began in March 2022. The findings, released today, highlight the psychological impact of the financial landscape on Canadians, particularly younger demographics.

On Wednesday, prior to the survey’s release, Bank of Canada Governor Tiff Macklem acknowledged that the central bank’s rate hikes could be nearing their intended effect in combating inflation, although he underscored the need for continued evaluation. Then today, during an event with the Saint John Chamber of Commerce, Macklem addressed the challenges Canadians face with persistent high inflation and steep interest rates, acknowledging widespread discontent but resisting calls to lower the policy rate, despite October’s slight easing of living costs.

The financial strain has manifested in various ways for Canadian households. Homeowners are grappling with ballooning mortgage payments, and many are prioritizing basic necessities over entertainment or travel due to escalating food costs. The Ipsos poll indicates that 34% of Canadians are dealing with heftier monthly debt payments, while nearly half fear future living costs will lead to more debt accruals. The situation has also taken a toll on mental health, with two-fifths of respondents reporting elevated stress and anxiety levels, particularly those with severe personal debt or earning below $40,000 annually.

In light of these challenges, MNP LTD president Grant Bazian suggests that Canadians explore budget-friendly socializing options and seek advice from debt specialists for fiscal management strategies. With the psychological repercussions of financial pressure leading to increased stress and social withdrawal, particularly among younger Canadians, Bazian’s advice points to the importance of maintaining social ties affordably.

The latest inflation data released on Tuesday indicates a year-over-year inflation rate of 3.1% in October, with New Brunswick (NYSE:) reporting a slightly lower rate of 2.8%. Despite these figures suggesting a trend toward easing, Macklem emphasized the necessity for consistent results within the Bank of Canada’s one-to-three-percent target range before considering rate reductions. He did not dismiss the possibility of further rate increases if high inflation persists.

Macklem avoided direct criticism of current government spending in relation to inflation but noted that no new pressures were expected based on recent fiscal updates. He also drew historical parallels to stringent measures taken in the early 1980s to control rampant inflation and highlighted the SaltWire Network’s call for community support in local journalism as part of their ongoing mission.

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Economy

Russian central bank says it needs months to make sure CPI falling before rate cuts -RBC

Published

4 months ago

December 26, 2023

Russian central bank says it needs months to make sure CPI falling before rate cuts -RBC

MOSCOW (Reuters) – Russia’s central bank will need two to three months to make sure that inflation is steadily declining before taking any decision on interest rate cuts, the bank’s governor Elvira Nabiullina told RBC media on Sunday.

The central bank raised its key interest rate by 100 basis points to 16% earlier in December, hiking for the fifth consecutive meeting in response to stubborn inflation, and suggested that its tightening cycle was nearly over.

Nabiullina said it was not yet clear when exactly the regulator would start cutting rates, however.

“We really need to make sure that inflation is steadily decreasing, that these are not one-off factors that can affect the rate of price growth in a particular month,” she said.

Nabiullina said the bank was taking into account a wide range of indicators but primarily those that “characterize the stability of inflation”.

“This will take two or three months or more – it depends on how much the wide range of indicators that characterize sustainable inflation declines,” she said.

The bank will next convene to set its benchmark rate on Feb. 16.

The governor also said the bank should have started monetary policy tightening earlier than in July, when it embarked on the rate-hiking cycle.

Economy

China identifies second set of projects in $140 billion spending plan

Published

4 months ago

December 25, 2023

China identifies second set of projects in $140 billion spending plan

© Reuters. FILE PHOTO: Workers walk past an under-construction area with completed office towers in the background, in Shenzhen’s Qianhai new district, Guangdong province, China August 25, 2023. REUTERS/David Kirton/File Photo

SHANGHAI (Reuters) – China’s top planning body said on Saturday it had identified a second batch of public investment projects, including flood control and disaster relief programmes, under a bond issuance and investment plan announced in October to boost the economy.

With the latest tranche, China has now earmarked more than 800 billion yuan of its 1 trillion yuan ($140 billion) in additional government bond issuance in the fourth quarter, as it focuses on fiscal steps to shore up the flagging economy.

The National Development and Reform Commission (NDRC) said in a statement on Saturday it had identified 9,600 projects with planned investment of more than 560 billion yuan.

China’s economy, the world’s second largest, is struggling to regain its footing post-COVID-19 as policymakers grapple with tepid consumer demand, weak exports, falling foreign investment and a deepening real estate crisis.

The 1 trillion yuan in additional bond issuance will widen China’s 2023 budget deficit ratio to around 3.8 percent from 3 percent, the state-run Xinhua news agency has said.

“Construction of the projects will improve China’s flood control system, emergency response mechanism and disaster relief capabilities, and better protect people’s lives and property, so it is very significant,” the NDRC said.

The agency said it will coordinate with other government bodies to make sure that funds are allocated speedily for investment and that high standards of quality are maintained in project construction.

($1 = 7.1315 renminbi)

Economy

Russian central bank says it needs months to make sure CPI falling before rate cuts -RBC

Published

4 months ago

December 25, 2023

Nabiullina said it was not yet clear when exactly the regulator would start cutting rates, however.

“We really need to make sure that inflation is steadily decreasing, that these are not one-off factors that can affect the rate of price growth in a particular month,” she said.

Nabiullina said the bank was taking into account a wide range of indicators but primarily those that “characterize the stability of inflation”.

“This will take two or three months or more – it depends on how much the wide range of indicators that characterize sustainable inflation declines,” she said.

The bank will next convene to set its benchmark rate on Feb. 16.

The governor also said the bank should have started monetary policy tightening earlier than in July, when it embarked on the rate-hiking cycle.