Business
Boost in Canada’s borrowing cost unlikely
OTTAWA—The old debate about whether central banks should raise rates to counteract housing bubbles is finding new life in Canada as the country copes with runaway prices in its two biggest real estate markets.
Home prices in Toronto are up 32 per cent over the past year and have more than doubled since the recession. In Vancouver, which is an even pricier city, they’ve climbed 58 per cent over four years. Meanwhile, household debt is at record levels, recently surpassing gross domestic product for the first time.
Lawmakers at every level have tried, with a succession of tailored policies, to engineer a slowdown, but have fallen short of achieving the desired effect.
Could now be the time for the Bank of Canada, which releases its biannual analysis of financial stability risks Thursday, to step in with higher borrowing costs to “lean against” the bubble, even at the expense of its inflation target?
Don’t bet the house on it.
Two lenses
The Bank of Canada looks at financial stability through two separate lenses. The central bank’s primary objective is to adjust interest rates to keep inflation as close to 2 per cent as possible. Financial imbalances, along with other moving parts such as trade, business investment and oil prices, factor into the decision making. For example, policy-makers would consider the effect a sharp housing correction would have on consumer spending. The bank also considers financial stability outside the context of macroeconomic objectives, because the economy can’t function properly without a stable financial system. Indeed, the bank acknowledged in 2011 that in some circumstances, pre-emptively leaning against a buildup of debt would be beneficial, even if it meant missing its inflation target temporarily. The distinction matters for policy.
Financial stability
When the primary concern is financial stability, the direction of policy is clear in the face of growing debt and financial imbalances; interest rates should be on the way up since cheap credit fuels household borrowing. From 2011 to 2013, the central bank addressed existing financial stability concerns in this way, by incorporating explicitly into policy first a tightening bias and then a reluctance to cut rates.
In fact, the focus on financial stability was controversial in government circles at the time and a source of friction between then-Bank of Canada governor Mark Carney and former prime minister Stephen Harper as the economy teetered on the verge of another recession in 2012. At the time, Carney was alone among Group of Seven central bankers to cleave to a tightening bias and, as a result, Canada’s currency continued to trade above parity with the U.S. dollar, slowing growth.
Inflation target
When the inflation target is the main policy impetus, things get messier.
Sometimes, inflation and financial stability concerns call for the same action. For example, if a red-hot housing market leads to higher inflation, it’s a textbook case for central-bank tightening.
Often, the two objectives conflict. A weaker economy would necessitate low interest rates, which in turn fuel financial imbalances. That’s where the central bank is today — unable to keep inflation at the 2-per-cent target over the past two years in an economy it says still has plenty of slack.
Raising interest rates to thwart an asset bubble would simply force the rest of the country to suffer for the excesses of Toronto and Vancouver housing markets.
“From the Bank of Canada’s perspective, what you have is a potential financial stability concern that isn’t explicitly part of the Banks’s inflation targeting framework, while inflation remains well below target,” said Jean-Francois Perrault, chief economist at Bank of Nova Scotia.
Since the oil-price collapse in 2014, there’s been little debate on the issue. Policy-makers at the central bank have been more concerned with getting inflation higher with lower rates, leaving regulators to tackle the financial stability issues.
So, now that Canada has emerged from the oil shock, does financial stability resurface as a driver of monetary policy?
The central bank’s own research hasn’t supported such a shift. A study published last year showed higher borrowing costs reduce financial vulnerabilities only modestly and impose large costs on the rest of the economy.
The central bank also distinguishes household indebtedness from the housing market, which allows it to worry less about rising home prices that are driven by factors such as population growth or supply constraints, as opposed to debt accumulation. And the recent run-up in home values hasn’t been accompanied by an equivalent run-up in credit growth.
The Bank of Canada has stopped mentioning the issue in its closely parsed rate statements. The last time the term “household imbalances” appeared was in the Dec. 7 statement. And there is evidence the market is cooling already on the back of recent measures by the Ontario government and the troubles at alternative mortgage lender Home Capital Group Inc.
Poloz has even dismissed the idea that higher borrowing costs would reduce the sort of speculative demand that seems to be prevalent in Toronto and Vancouver.
“They haven’t said anything to suggest financial stability considerations would trump the inflation objective,” Perrault said.
Most indicative may be that Poloz has actually turned the financial stability argument on its head. Higher-than-needed interest rates would not only slow the economy, they would even be bad for financial stability by increasing the financial stress of highly indebted households.
This was part of the rationale for cutting rates twice in 2015. And it’s another way of saying that with household debt levels where they are, it’s already too late for the Bank of Canada to lean in.
Beauty enthusiasts rejoice! Beauty Week at Hudson’s Bay is back in Toronto for another year. It’s time to stock up on all of your fall essentials and, maybe discover some new ones.
From Friday, August 18 to Sunday, August 27, you can expect a truly elevated beauty experience in-store with incredible special offers, limited-time gifts, and exciting activations.
If you’re a diehard beauty lover, you’ll already know that Hudson’s Bay is the place to shop thanks to its extensive range of over 195 skin and makeup brands from both luxury labels and masstige brands — including Tata Harper, Estée Lauder, YSL, Nars Cosmetics, Bobbi Brown, and so much more.
Throughout The Bay’s Beauty Week, visitors can take in some at-counter activations and interactive expert-led tutorials, where there will be chances to get makeup touch-ups from top-tier brands, try a spritz of the most alluring fragrances, and sample tons of new products.
This year’s Beauty Week highlight is the ‘Best in Beauty’ tote, a meticulously-curated selection of 30 deluxe samples from an array of top-tier brands like Dr. Barbara Sturm and Shiseido spanning skincare, fragrance, and makeup — all in a super sleek bag.
The tote, which is valued at over $300, is retailing for just $39 and is a fantastic way to explore new products (without breaking the bank). However, there is a limited quantity, so if you want to get your hands on one, you’ll need to be fast.
Wondering exactly what Beauty Week’s free gifts with purchases entail? If you spend over $95 at Lancôme, you will receive a six-piece set valued at $130. Or, you can get an Estée Lauder gift valued at $170 with purchases over $80. (And that’s just to name a few.)
If you’re a Hudson’s Bay Rewards member, you’ll also get $20 in Hudson’s Bay rewards when you spend over $100 on beauty.
The Canadian Armed Forces (CAF) have several non-combat jobs, some of which do not require a college degree or past work experience.
Life in the forces has several benefits, such as paid education plans (college, university and graduate-level programs), 20 paid vacation days, health and dental coverage for you and your family, maternity and paternal leave, and pension plans. You can learn more about the benefits in detail here.
And to make it easier to gauge if you qualify, the listings also include related civilian jobs to see if it’s your ideal role.
Financial services administrator
Related civilian jobs: Financial records entry clerk, financial manager, accounting technician, bookkeeper, budget officer, cashier clerk, business planner technician, and verification manager.
Description: You’ll help budget resources for all military activities besides providing financial assistance.
Education: You need to have completed Grade 10.
Duties: As a financial services administrator, you’ll be responsible for bookkeeping and managing budgets. You’ll also provide support in accounts payable and accounts receivable.
Work environment: Those in this role work at CAF bases, on ships or overseas. You might also be expected to help special operation units, recruiting offices, schools, and medical organizations.
Postal clerk
Related civilian jobs: Mail clerk, mail sorter.
Description: You’ll provide postal services to members and their families at bases and establishments.
Education: Grade 10. No previous work experience or related career skills are required.
Duties: As the postal clerk, you’ll handle mail duties.
Work environment: Besides a postal office, you may work on a ship or a mobile postal van. You might be expected to serve with Royal Canadian Navy, the Army, and the Royal Canadian Air Force in Canada and abroad.
Dental technician
Related civilian jobs: Dental assistant, dental hygienist.
Description: You’ll be helping dental officers provide dental services to CAF members, their families, and dependents.
Education: Level II dental assisting diploma from an accredited college or a National Dental Assisting Examining Board (NDAEB) certificate.
Duties: Those in this role will be responsible for various responsibilities, including disinfection and sterilization of dental equipment, applying rubber dams, placing cavity liners, and controlling bleeding. In addition, you’ll assist in laboratory procedures like creating casts, custom trays, and mouthguards.
Work environment: This role will require you to work in a military dental clinic, a Mobile Dental Clinic, an Air Transportable Dental System, or onboard a ship. You might be expected to work on a base in Canada or other operations in other parts of the world.
Human resources administrator
Related civilian jobs: Records administrator, data entry supervisor, receptionist, office manager, executive assistant, payroll clerk, and information management technician.
Description: Provide administrative and general human resources support.
Education: Grade 10. No previous work experience or related career skills are required.
Duties: In addition to human resources administration and services, you’ll be handling pay and allowances, managing automated pay systems, and maintaining personnel records.
Work environment: HR administrators work at all CAF bases in Canada. They also work on ships and overseas to support the Canadian Army, Royal Canadian Navy, or Royal Canadian Air Force operations.
Medical assistant
Related civilian jobs: Emergency medical responder, ambulance and first aid attendant, registered nursing assistant, licensed practical nurse, and hospital orderly.
Description: Successful candidates will help treat the sick and injured in CAF units. You’ll be assisting and supporting nursing and medical officers.
Education: Minimum of Grade 11 biology, Grade 10 physics or chemistry, and Grade 10 math.
Duties: You’ll provide initial care and essential life support treatments in trauma cases. You’ll help with health assessments (hearing and vision tests, perform basic lab procedures, etc.) and initiate and manage medical records and reports. You’ll also be expected to provide support and first aid during training exercises.
Work environment: Medical assistants may serve with the Royal Canadian Navy, the Royal Canadian Air Force or the Canadian Army as part of the Canadian Forces Health Services Group. Those in this role are exposed to the same risks as the forces they support.
Porter Airlines is once again stirring the pot among Canadian airline rivals, now going after Air Canada’s Aeroplan members by offering to match their loyalty status to an equivalent of their own.
The beloved airline, which recently ranked as having the best cabin service in North America, challenged the competition for the second time this year, after previously deploying a similar tactic against WestJet in the spring.
Earlier in April, Porter presented customers with a limited-time offer to match the loyalty status of WestJet’s patrons with VIPorter levels.
Now, they’re offering Aeroplan members to seamlessly transition to an equivalent VIPorter Avid Traveller status based on their existing membership tier.
Members can then take advantage of an array of travel perks that come with flying Porter, including seat selection, baggage, and flight changes.
For those currently holding an Aeroplan membership, there are two ways to acquire the Avid Traveller status for the rest of 2023:
Status-Based Match:
- Aeroplan 25K members = VIPorter Venture
- Aeroplan 35K members = VIPorter Ascent
- Aeroplan 50K, 75K, and Super Elite = VIPorter First
Flight Segments-Based Match:
- 5 flight segments = VIPorter Passport
- 8 segments = VIPorter Venture
- 17 segments = VIPorter Ascent
- 28 or more segments = VIPorter First
Members will have to first submit their applications on Porter’s website. Registration will remain open until September 6, 2023.
In order to maintain their membership level through 2024, customers will have until the end of 2023 to reach the following reduced qualifying spend (QS) targets:
- Passport = $500 in QS
- Venture = $750 in QS
- Ascent = $1500 in QS
- First = $2500 in QS
Over the past year, Porter has launched an aggressive expansion strategy, including everything from introducing longer flights on newly-purchased jet planes flying out of Toronto Pearson, free WiFi, and a new all-inclusive economy experience.
With Canadians losing both Swoop and Sunwing as WestJet incorporates both into their mainline business, Porter’s direct competition is welcome to keep prices competitive.
-
Business4 months agoThe Canadian Armed Forces are hiring for several non-combat military jobs
-
Lifestyle4 months agoOntario Line subway construction permanently shuts down beloved Toronto bakery
-
Business4 months agoPorter’s new loyalty program promises to match Air Canada’s Aeroplan status
-
Business4 months agoPeople call out Sobeys for ridiculous prices after another expensive find at Ontario store
-
Business4 months ago‘Here, everything feels much closer’: Entrepreneur says leaving Toronto for Innisfil good for business
-
Business4 months agoIndigo store in Toronto will be first to offer alcohol in strange rebrand
-
Lifestyle4 months agoWoman crashes car and runs around highway with bottle of booze on typical day in Toronto
-
Business4 months agoToronto is in a housing ‘crisis’ leaving newcomers, residents in the lurch