Financial markets seem to be betting on an interest rate increase in the wake of news that the CPI year over year inflation rate jumped to (the horror, the horror!) 2.0% in February. A look at the numbers shows that any inflation problem beyond temporary gas price issues is pretty well confined to Alberta. Here, the year over year inflation […]
Read moreIn setting monetary policy, the Bank of Canada emphasizes “Core CPI,” which excludes the most volatile components of the Consumer Price Index to provide a clearer measure of underlying trends. My last post noted that average Canadian wage increases exceeded inflation by only 1% during the past year. However, inflation was held down by a dip in energy prices. Therefore, […]
Read moreDespite Alberta’s booming economy, Albertans are making about the same amount per hour as they were a year ago. Specifically, the resource boom has increased prices as much as wages. Statistics Canada released January’s inflation numbers today. It is interesting to compare them with January’s wage numbers. Nationwide, average hourly wages increased by 2.2% and consumer prices rose by 1.2% […]
Read more(This note was prepared for a meeting of trade union economists with Paul Jenkins, Deputy Governor of the Bank of Canada, to be held on Monday, December 11, 2006.) Introduction The Bank of Canada believes that the Canadian economy is currently operating “just above†capacity, justifying this week’s decision to leave interest rates unchanged despite a noticeable slowdown in economic […]
Read moreIt was a ho-hum announcement, and I don’t know if it generated much media coverage in Canada or not. But last week the Bank of Canada and the Dept. of Finance announced another 5-year extension (to 2011) of the current inflation targeting regime (keep total year-over-year inflation within a point above or below 2 percent, using the core inflation rate […]
Read moreThe 2006 Nobel Prize in Economics goes to Edmund Phelps. (Technically, this is the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel, because Nobel did not actually endow a prize in economics back in 1901; the economics prize was added in 1968.) The essay accompanying the prize can be found here. Below I’ve pasted two differing econo-blog […]
Read moreAre we headed towards a recession in 2007? Housing markets have begun to turn, interest rates are back where they were pre-9/11 and oil is near $80 a barrel. Nouriel Roubini puts the risk of a US recession at 50% for 2007. I like this approach – no one can predict the future so we must think ahead in terms […]
Read moreStatistics Canada reports on industrial capacity, an important data point for the Bank of Canada, ever watchful for inflation: Industrial capacity utilization rates First quarter of 2006 Capacity use among Canadian industries edged down in the first three months of 2006 in the wake of the rising loonie and a decline in foreign demand for some manufactured goods. Industries operated […]
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