Author: Consultant

PM Trudeau, Poilievre spar over recession concerns, affordability bill

OTTAWA – 

Prime Minister Justin Trudeau and Conservative Leader Pierre Poilievre sparred in the House of Commons on Tuesday over concerns of a looming recession and how the federal government should be tackling inflation, with Trudeau accusing Poilievre of “blocking” the Liberals’ bill to implement housing and dental benefits.

Tuesday’s Question Period saw a back-and-forth between Trudeau and Poilievre, with the Conservative leader accusing Trudeau of “bragging about” the $500 top-up for low-income renters as part of the proposed affordability legislation, while adding “these days, you can’t even rent a dog house in the backyard for that kind of money.”

He, along with several other Conservative MPs, also repeatedly called on the government to end its plans to “triple, triple, triple” the carbon tax.

“It is not a luxury to heat your home in Canada in the winter time, yet the prime minister wants to punish people for doing it,” Poilievre said.

“If he’s not going to back down on his plan to triple the tax, will at least he have the decency to exempt home heating this winter from that tax hike?” he added.

In response, Trudeau said that if Conservatives cared about affordability for Canadians, they would be backing and not blocking Bill C-31. It was a line of attack he repeated throughout the day, starting first in remarks to reporters on his way into a cabinet meeting on Tuesday morning.

“If (Poilievre) actually wanted to support low-income families, he’d step up and support our measures to give more money to low-income families for the cost of dental care to their kids, or to help the 1.8 million Canadians who will benefit from our additional help on the housing benefit,” Trudeau said in the House.

“Not only does the leader of the Opposition not support those measures to help low-income families with real money this fall, he’s blocking their passage in the House, preventing anyone from getting that money,” he added.

Many experts are forecasting a recession, with economists from the Royal Bank of Canada saying last week it’s expected as soon as early 2023.

The Liberals’ Bill C-31 — to provide dental-care benefits for children under 12, and a one-time rental housing benefit for eligible Canadians — has remained at second reading in the House of Commons since it was tabled on Sept. 20.

In a move to see the bill fast-tracked through remaining stages by the end of next week, the government has advanced a motion that would see MPs burning the midnight oil to wrap up their work on the 36-page legislation and pass it into the Senate. The Conservatives and Bloc Quebecois are opposing the government’s attempts to expedite the bill, suggesting more study and consideration is needed on the government’s spending plans.

The Liberals promised to focus on affordability and the rising cost of living this fall by passing two pieces of legislation: Bill C-30 to temporarily double the GST credit, which passed through the Senate and received Royal Assent on Tuesday, and the dental and housing benefit bill. Connected to the Liberal-NDP supply-and-confidence deal, there is some urgency from the government benches, as Trudeau pledged to the NDP that the government would get both cost-of-living bills passed into law, and the benefits out to eligible Canadians, before the end of the year.

While the NDP is helping the Liberals advance Bill C-31, getting in on the affordability conversation during question period NDP Leader Jagmeet Singh accused the Liberals of having no plan to deal with a looming recession, especially when it comes to employment insurance and support for Canadians who may lose their jobs.

Oil up in tight market as U.S. sets release of more reserves

Oil prices rose on Wednesday as caution over tightening supply countered the negative impact of uncertain demand, and news that the United States will release more crude from its reserves.

Brent crude futures for December settlement ended up $2.38, or 2.6%, to $92.41 a barrel. U.S. West Texas Intermediate crude (WTI) for November, which is expiring on Thursday, ended at $85.55 a barrel, up $2.73, or 3.3%.

“Realistically an SPR release is near-term bearish, long-term bullish because eventually you’re going to have to buy it back,” said Gary Cunningham, director of market research at Tradition Energy. “Overall the market continues to swing wildly and chop around on erratic news.”

In the previous session, the benchmarks hit a two-week low after U.S. President Joe Biden said he plans to release 15 million barrels of oil from the Strategic Petroleum Reserve (SPR).

Biden, in remarks Wednesday, noted U.S. plans to repurchase oil for the reserve if prices fall enough. The reserve release would be the last sale from the planned sale of 180 million barrels of oil announced shortly after Russia invaded Ukraine in February.

Oil prices have rallied since the Organization of the Petroleum Exporting Countries agreed to reduce its production target by roughly 2 million barrels a day – though that is expected to only include about 1 million barrels of actual output declines.

“They want Brent around $90, so they’re going to get it and going to continue to cut output to hold that number,” Cunningham said.

U.S. crude inventories fell unexpectedly last week – down 1.7 million barrels, weekly government showed, against expectations for a build of 1.4 million barrels. SPR levels fell 3.6 million barrels to just over 405 million, the lowest since May 1984.

A pending European Union ban on Russian crude and oil products and the output cut from the Organization of the Petroleum Exporting Countries and other producers including Russia, a group known as OPEC+, of 2 million barrels per day also supported prices.

The EU’s sanctions on Russian crude takes effect in December, and sanctions on oil products will take effect in February.

Canadian dollar pares decline as hot inflation bolsters rate hike bets

The Canadian dollar CADUSD +0.14%increase weakened against its U.S. counterpart on Wednesday as investor sentiment soured, but the currency’s decline was capped as hot domestic inflation data led to raised bets on another jumbo interest rate hike by the Bank of Canada.

Canada’s annual inflation rate inched down to 6.9 per cent in September, Statistics Canada data showed.

That was the third consecutive monthly deceleration but a notch ahead of analyst forecasts of 6.8 per cent, while measures of underlying price pressures failed to ease.

Money markets see a 66 per cent chance that the Bank of Canada would raise interest rates by three-quarters of a percentage point at its next policy decision on Oct. 26, up from about 30 per cent before the data.

U.K. inflation was also hot, which pressured global financial markets and helped drive gains for the safe-haven U.S. dollar against a basket of major currencies.

The Canadian dollar was down 0.2 per cent at 1.3770 to the greenback, or 72.62 U.S. cents, after trading in a range of 1.3719 to 1.3800.

Meanwhile, U.S. crude oil prices were up 0.7 per cent at $83.37 a barrel as bullish signals like falling U.S. crude stocks were countered by bearish factors such as uncertain Chinese demand growth. Oil is one of Canada’s major exports.

Canadian government bond yields were higher across the curve, tracking the move in U.S. Treasuries. The 10-year rose 11.8 basis points to 3.474 per cent, approaching the top of its range since June.

Long-awaited CRTC decision paves way for increased competition and cheaper cell phone bills

Canada’s telecom regulator has released the details of its mobile wireless carrier framework, opening the doors for eligible regional

companies to negotiate with incumbents to access their cell networks and offer competitive services.

The terms and conditions fill in the details of a 2021 policy from the Canadian Radio-television and Telecommunications Commission, which required incumbents to do business with mobile virtual network operators (MVNOs) that met certain criteria. As of now, incumbent mobile operators must accept requests from regional carriers to buy space on their networks.

An MVNO is a carrier that that doesn’t own its own wireless network and offers service by piggybacking on the network of an incumbent. Typically, they offer cheaper cell service, as they don’t have to build and maintain their own networks. However, the CRTC requires them to build their own infrastructure within seven years.

The new network access rules are part of the federal government’s efforts to bring down cellphone bills in Canada by encouraging smaller entrants in the market.

In the 96-page document published on Wednesday, the CRTC laid out the eligibility criteria, as well as how companies would be required negotiate prices, and other requirements for incumbents. In Canada, incumbents include Bell Canada BCE-T -0.87%decrease, Rogers Communications Inc. RCI-B-T +0.42%increase, Telus Communications Inc. T-T and Saskatchewan Telecommunications.

While some experts say the CRTC’s terms have provided an avenue for more competition, others argue they will lead to further standstill.

There is also yet no consensus as to whether the terms are more favourable to incumbents or the regional MVNOs. The terms and conditions emerged via suggestions from the incumbents. However, the CRTC notes several instances where it rejected provisions that would restrict MVNOs’ eligibility.

The CRTC has determined that to apply, companies must own spectrum in the region where they hope to operate, be registered with the commission as a wireless carrier, have a home public mobile network somewhere in Canada, and actively offer mobile wireless services commercially to retail customers. Companies who don’t meet these criteria can still approach incumbents, but those incumbents won’t be required to negotiate with them.

The CRTC did not specify rates – that will be up to the MVNOs and the incumbents, with final-offer arbitration by the CRTC if negotiations fail. Those rates must be open for renegotiationevery two years at minimum.

The entrants will have only seven years to build their own infrastructure – after that date, incumbents are no longer required to provide access to their networks.

The terms and conditions are in line with the regulatory policy published last year, and with the CRTC’s push for facilities-based systems, in which telecom companies invest in their own physical infrastructure rather than operating through the networks of others. Such investments are expensive, and the seven-year piggyback period allows those carriers to make income to fund their network building.

“Overall, I think the commission has tried to preserve the incentives for continued investment,” said Mark Goldberg, head of telecom consultancy Mark H. Goldberg & Associates Inc. Nonetheless, he noted, despite the many details in the document, what happens at the end of the seven years is unclear.

According to Anthony Lacavera, founder of Freedom Mobile (previously Wind, now owned by Shaw Communications Inc.), the terms indicate to new mobile carriers with their own infrastructure that they won’t have to compete with MVNOs who can resell wireless access indefinitely without investing in their own network.

“It’s signalling to somebody like T-Mobile, ‘If you come into Canada, you don’t have to be worried about artificial competition,’” he said. “Canada needs a competitor like that to push Bell, Telus and Rogers to lower prices and improve on customer experience.”

Spokespeople from Bell, Telus and Rogers said their companies are reviewing the terms.

For Vidéotron, a Quebec-based cable company owned by Quebecor Media Inc. that has wireless ambitions, the terms were positive. Chief executive officer Pierre Karl Péladeau said in a statement that he expects “the incumbents to act in good faith, quickly negotiate the terms of a wholesale access agreement, and allow Vidéotron access to their networks as soon as possible.”

The terms were also encouraging for Montreal-based cable company Cogeco Inc., even though it does not yet meet all the eligibility criteria. While the company already owns spectrum in the region where it hopes to begin mobile operations, it is not yet a commercial mobile wireless operator in Canada. In a statement, Cogeco spokesperson Youann Blouin said the company would take the new requirements into account, but overall saw the terms as “a positive step” in the development of Canada’s MVNO framework.

However, some say the strict eligibility requirements cut off opportunity for competition.

“At the end of the day, while the decision provides some benefits to regional carriers, the overall wholesale MVNO regime remains highly restrictive and only available to regional carriers that are already providing mobile wireless services,” said Geoff White, executive director of the Competitive Network Operators of Canada, the industry association representing independent internet service providers.

Some have also pointed out that the two-year renewal clause could create significant administrative delays.

“That seems like a potentially catastrophic failure of the framework,” said Andy Kaplan-Myrth, vice-president of regulatory affairs at TekSavvy Solutions Inc.

“The CRTC has historically taken a long time to come to decisions on arbitration. If the incumbents can’t agree on rates, this could still take years to have any impact.”

In a note to investors, National Bank analyst Adam Shine said MVNO deals could be struck as early as the first quarter of 2023, but he would be surprised to see any MVNO service launched before next summer.

Bank of Canada expected to raise rates as inflation rate remains stubborn

Canadian inflation slowed slightly in September, but not to the extent that financial analysts were expecting as some products and services continued to accelerate in price.

The numbers pave the way for another outsized Bank of Canada rate hike next week – perhaps taking the policy rate to 4 per cent, the highest since 2008, as more economists are now predicting.

The consumer price index, or CPI, rose 6.9 per cent in September from a year earlier, Statistics Canada said Wednesday in a report. That was down from 7 per cent in August and marked the third consecutive month of deceleration. It was, however, widely seen as a disappointment on Bay Street: Analysts had predicted inflation would ease to 6.7 per cent.

Inflation is proving sticky. After excluding food and energy, which can be volatile aspects of the CPI, prices rose 5.4 per cent over the past year, up from 5.3 per cent in August. On a monthly basis, CPI rose at a faster pace in September than in August. And in a distressing sign for many families, grocery inflation hit a new multidecade high.

To tamp down inflation, the Bank of Canada is universally expected to deliver another large rate hike at its next decision on Oct. 26. Analysts are divided on the magnitude of an increase, although most are leaning toward a 75-basis-point hike from the current 3.25 per cent. (A basis point is 1/100th of a percentage point.)

For shoppers, there was no relief at the supermarket. Grocery prices rose 11.4 per cent on an annual basis, the quickest pace since 1981. The price increases were widespread, with meat rising 7.6 per cent, dairy products by 9.7 per cent, and fresh vegetables by 11.8 per cent.

“Contributing to price increases for food and beverages were unfavourable weather, higher prices for important inputs such as fertilizer and natural gas, as well as geopolitical instability stemming from Russia’s invasion of Ukraine,” Statscan said in the report.

Prices for durable goods rose 6.7 per cent in September, on an annual basis, up from 6 per cent in August. Furniture prices jumped 13.3 per cent, while those for passenger vehicles rose 8.4 per cent, which Statscan attributed in part to a semiconductor shortage that’s dragged on for years.

Inflation slowed to 6.9% in September. Here’s what that means for the cost of living in Canada

Canadian consumers are facing another issue: the depreciation of the loonie. The Canadian dollar has tumbled about 10 per cent against its U.S. counterpart over the past year. Investors have flocked to the U.S. dollar of late, in part because the greenback is a safe-haven asset during times of economic turmoil, but also because the U.S. Federal Reserve is raising interest rates quickly, boosting the returns on some U.S. investments.

While a weaker loonie can be good for Canadian exporters, it also raises the price of imported goods – a troubling development at a time of already lofty inflation.

“That aggravates our inflation issue,” Mr. Porter said. “If the Bank of Canada were to stand aside when the Federal Reserve is hiking very aggressively, that would weaken the currency even more. We don’t have to necessarily match U.S. interest rates tick for tick, but we can’t stray that far away.”

The Bank of Canada published surveys of consumers and businesses on Monday that showed pessimism is spreading through the economy, with a majority of respondents expecting the country to enter a recession in the next year. Inflation expectations – which are key in wage negotiations and price-setting – remain high among households and companies.

Confidence is waning in the private sector. On Monday, Bank of Nova Scotia became the latest financial institution to predict an economic downturn in the near future, saying Canada would experience a “technical recession” in the first half of 2023.

“The decline in economic activity is likely to be minor and short-lived owing to the underlying resilience of the economy,” read the report from chief economist Jean-François Perrault and René Lalonde, the bank’s director of modelling and forecasting.

“Firm and household balance sheets remain strong, and the labour market is still dramatically short of workers. Regardless of the headwinds coming from beyond our borders, the simple reality is that Canadian firms are confronting serious challenges in their ability to increase production owing to these labour shortages.”

Workers, meanwhile, are continuing to see their purchasing power decline. In September, the average hourly wage rose 5.2 per cent on an annual basis, lagging the change in CPI.

New Zealand farmers hit streets to protest cow-burp tax plan

WELLINGTON, New Zealand (AP) — Farmers across New Zealand took to the streets on their tractors Thursday to protest government plans to tax cow burps and other greenhouse gas emissions, although the rallies were smaller than many had expected.

Lobby group Groundswell New Zealand helped organize more than 50 protests in towns and cities across the country, the biggest involving a few dozen vehicles.

Last week, the government proposed a new farm levy as part of a plan to tackle climate change. The government said it would be a world first, and that farmers should be able to recoup the cost by charging more for climate-friendly products.

Because farming is so big in New Zealand — there are 10 million beef and dairy cattle and 26 million sheep, compared to just 5 million people — about half of all greenhouse gas emissions come from farms. Methane from burping cattle makes a particularly big contribution.

But some farmers argue the proposed tax would actually increase global greenhouse gas emissions by shifting farming to countries less efficient at making food.

At the protest in Wellington, farmer Dave McCurdy said he was disappointed in the small turnout, but said most farmers were working hard on their farms during a spell of good spring weather at a particularly busy time of year.

He said farmers were good environmental stewards.

“It’s our life, our family’s lives,” he said. “We’re not out there to wreck it, we wouldn’t make any money. We love our farms. That’s what annoys us. We’re painted at these bad guys, but a lot of farmers have spent generations looking after that land.”

He said the proposed tax didn’t take proper account of all the trees and brush he and other farmers had planted, which helped trap carbon and offset emissions. He said if the proposed tax and herd reductions went ahead, it would be ruinous to many farmers.

“I’m out,” he said. “Waste of time.”

Farming remains vital to New Zealand’s economy. Dairy products, including those used to make infant formula in China, are the nation’s largest export earner.

McCurdy said farmers had almost singlehandedly kept the economy afloat during the COVID-19 lockdowns, and now that the threat had passed and a recession was looming, the government was coming after them.

New Zealand Prime Minister Jacinda Ardern has pledged the nation will become carbon neutral by 2050. Part of that plan includes reducing methane emissions from farm animals by 10% by 2030 and by up to 47% by 2050.

The government had worked with farmers and other groups to try to come up with an emissions plan they could all live with. But many farmers have been incensed by the government’s final proposal, while environmentalists have said it doesn’t go nearly far enough.

Farmer Matt Swansson said he’d “had a gutsful” of the government and would consider refusing to pay the new tax.

He said on beautiful evenings on his farm, he thinks he has the best job in the world.

“But when it’s rain, drizzle, and you get home and listen to the news,” Swansson said. “Why do you bother?”

Parkland says third-quarter results will fall below expectations, but full-year guidance maintained

Parkland Corp. PKI-T -10.22%decrease is warning its third-quarter results will fall short of its expectations, however the company is maintaining its guidance for the full year.

The Calgary-based company says it expects $325-million in adjusted earnings before interest, taxes, depreciation and amortization for the quarter.

It says the result is being driven by the macroeconomic environment and volatile product prices.

Parkland says rapidly falling gas prices in the U.S. resulted in non-recurring wholesale inventory and risk management losses of about $65-million, while its refining business faced higher operating, natural gas, transportation and compliance costs, as well as higher trailing crude prices.

The company says in Canada falling product prices lowered fuel unit margins compared with the prior quarter.

However, it noted that it is confident in its fourth-quarter outlook and expects to deliver 2022 adjusted EBITDA within its guidance range of between $1.6-billion and $1.7-billion

Loblaw hikes supply chain charges for its suppliers as transportation costs rise

Loblaw Companies Ltd. L-T -1.38%decrease is raising the supply chain handling fees it charges suppliers of its grocery and drugstores.

In a letter to suppliers dated Oct. 3, the company says it experienced significant year-over-year increases in many of its supply chain costs, including higher “cartage” or freight costs.

Loblaw says its fees will go up Jan. 1, 2023, with distribution centre delivery charges increasing to 1.17 per cent and direct-to-store delivery charges rising to 0.36 per cent.

Sylvain Charlebois, Dalhousie University professor of food distribution and policy, says the notice is an example of a unilateral decision made by grocers to increase fees and get suppliers to financially support their operations.

He says sometimes the higher fees and charges are warranted, and sometime they aren’t, and says this points to why the grocery industry needs a code of conduct.

In a progress report in July, an industry committee set up to establish a grocery code of conduct said it made significant progress but may require government intervention if it fails to resolve the outstanding matters by November.

Loblaw vice-president of communication Catherine Thomas says at this time of year, the company advises its suppliers of fees to move goods through its network for the following year.

“This includes situations where we pick up, ship and deliver their goods for them,” she said in an emailed statement.

“Our costs for handling this business have gone up and consequently we are notifying suppliers of some adjustments to the fees, if they choose to use these services.”

Earlier this week, Loblaw announced it would freeze prices on all its in-house No Name products until Jan. 31, 2023, in an effort to help customers grappling with inflation.

Critics warned the company could look to recoup profit losses elsewhere.

Inflation: 6.9%, mainly Food Inflation. Bank of Canada to raise interest rates next week

Wednesday’s Canadian inflation report left little doubt short-term interest rates in this country will continue to go up – and money markets are now reflecting better odds of a 75 basis point hike by the Bank of Canada at its next policy meeting than 50 basis points. Some economists have also changed their forecasts, believing a 75 bps hike is on the way.

While the annual inflation rate inched down to 6.9% in September from August’s 7%, the third consecutive monthly deceleration, that was still higher than the average economist forecast of 6.8%.

When excluding food and energy, prices rose 5.4% from a rise of 5.3% in August. On the month, Canada’s consumer price index rose 0.1%, slightly ahead of forecasts that it would remain flat. Lower prices at the gas pump offset another 41-year high in food costs.

Money markets are now pricing in a 67% likelihood of a 75 basis point hike by the Bank of Canada at its Oct. 26 policy rate decision, up from about 30% prior to the data. The policy rate is seen peaking between 4.25% and 4.50% early next year, according to Refinitiv Eikon data. It now stands at 3.25%.

The Canadian dollar only rose modestly following the 830 am (ET) inflation data but the Canadian bond market reacted immediately: the 2-year government of Canada bond yield rose to 4.18% – up about 10 basis points from prior to the data. The closely watched 5-year bond yield, influential on the setting of fixed mortgage rates, is up about 13 basis points to 3.639%. That’s just below a multiyear high of 3.693% hit earlier this month.

Here’s how economists and market strategists are reacting to the inflation report:

Douglas Porter, Chief Economist, BMO Capital Markets:

Bluntly, inflation did not ease as much as anticipated last month, even as gasoline costs took a big step back. Underlying inflation remains extremely persistent and sticky at above 5%. Combined with the BOC’s recent tough rhetoric, the recent weakness in the Canadian dollar, and the strong likelihood that the Fed hikes by 75 bps at the next FOMC, we are now expecting a like-sized 75 bp hike next week from the Bank. This would take the overnight rate to 4.0%, and we suspect that will not be the end of it—pencilling in a 25 bp move in December.

Stephen Brown, Senior Canada Economist, Capital Economists:

The Bank’s core CPI inflation measures were unchanged in September but, given that we expected a decline due to more favourable base effects, that probably increases the odds of another 75bp hike next week, particularly when households near-terms inflation expectations have risen further.

The monthly acceleration in non-food and energy prices, together with the unchanged annual rates of CPI-median, CPI-trim and CPI-common, means that the Bank is still yet to see “clear evidence that underlying inflation has come down”, as Macklem stressed in his speech earlier this month. With Macklem also warning us about elevated consumer inflation expectations, and the data this week showing that housing starts in the apparently interest rate-sensitive construction sector surged in September, the data this week lead us to think that the Bank is likely to press on with a 75 bp hike next week, rather than drop down to a 50 bp move.

Karyne Charbonneau, executive director, Economics, CIBC Capital Markets:

There will be some long faces at the Bank of Canada this morning as inflation cooled less than in expected. Unadjusted headline CPI increased 0.1% in September, with the annual rate easing only one tick to 6.9% (consensus -0.1%, 6.7% y/y). This is the third consecutive deceleration in headline CPI driven mainly by the fall in gasoline prices. Given that those prices have since reversed, the next month could see headline inflation temporarily heading in the wrong direction again. Meanwhile, food prices continued to rise at a historic pace. But that is not the main focus for the Bank of Canada, who is paying closer attention to core inflation. CPI excluding food and energy rose by 0.4% seasonally adjusted on the month, faster than last month and a pace too high to be consistent with the 2% target, but still an improvement from earlier in the summer.

The Bank of Canada has clearly not slayed the inflation dragon yet and is therefore set for another large rate hike next week. The pace of growth in seasonally adjusted inflation excluding food and energy picked up by more than expected this month and is too high for comfort. As such, we now believe the Bank will need to go with a 75 bps hike next week rather than the 50 bps we previously anticipated. The Bank might then be left with a last 25 bps in December if growth numbers support it.

Matthieu Arseneau and Alexandra Ducharme of National Bank Financial:

September’s inflation data was disappointing. Indeed, after a welcomed calm in August, price growth picked up in September. Economists were expecting gasoline prices to fall, but did not foresee the dramatic jump in food prices. Let’s hope that rumors of a price war among major grocery chain will contribute to calm down this critical expenditure for Canadians. Housing was also a major contributor to price increases this month, with mortgage interest cost rising by 2.5%, the largest increase since 1971. Since the central bank is responsible for this development, it is interesting to note that this component increased monthly headline inflation by roughly 0.1%. Nevertheless, gains were widespread in September as evidenced by CPI-Median and CPI-Trim increasing 0.27% and 0.35%, a pace that, when annualized, stands above the Bank of Canada’s target range.

It turns out that we must not be overly influenced by the volatile monthly movements and perhaps look at the recent trend which remains encouraging for the Bank of Canada. Back in July, Bank of Canada expectations for Q3 headline annual inflation was at 8.0%, it finally came out 8 ticks lower (7.2%). There is also downside risk to the 2.0% annualized growth the central bank was expected for the quarter given the evolution of the economy since then. Those positive developments on the inflation front and on the pace of the economy which has moderated significantly suggest less acute price pressures in the coming months and that monetary tightening could be less aggressive than it is south of the border.

Leslie Preston, Managing Director & Senior Economist, TD Economics:

It is great that headline inflation took a small step in the right direction in September, but underlying inflation pressures in core measures showed no signs of cooling down. The BoC has hiked interest rates 300 basis points so far this year, and the impact of that is starting to be felt in the economy, from housing to consumer spending. But, with the Bank of Canada’s (BoC) core measures of inflation more than 2 percentage points from the target range of 1-3%, more cooling in demand is required. Today’s report emphasizes the need for a hefty 50 basis point hike next week in the BoC’s overnight rate. We expect the bank is getting closer to a pause on rate hikes, once it reaches 4% by the end of the year.