Recent good news about a strong economy and job market is bad news for the fight against inflation. That’s the message from the Bank of Canada, which raised its interest rate today to 4.75%.

“Consumption growth was surprisingly strong and broad-based, even after accounting for the boost from population gains. Demand for services continued to rebound. In addition, spending on interest-sensitive goods increased and, more recently, housing market activity has picked up,” the bank said in a news release. “The labour market remains tight: higher immigration and participation rates are expanding the supply of workers but new workers have been quickly hired, reflecting continued strong demand for labour. Overall, excess demand in the economy looks to be more persistent than anticipated.”

What that means for Greater Victoria’s economy, and whether a recession is unavoidable will be hot topics tomorrow, when the bank’s Deputy Governor Paul Beaudry speaks at a Chamber Business Leaders Luncheon.

The Chamber applauds the ongoing investment in new workers through the Adult Basic Education and English Language Learning Pathways. Camosun College received $240,625 in funds for 2022/23. and, this year, the province is providing $3.8 million to help students earn pre-requisites for post-secondary programs they need to meet career goals.

What is going on with Canada’s economy? Talk of a looming recession has been ongoing for months, but the latest GDP figures released today by Statistics Canada show the economy grew faster than expected. The economy grew at a rate of 3.1% in the first quarter, after Statistics Canada had been forecasting an increase of 2.5%.

The news comes one week before the Bank of Canada’s next interest rate announcement. The pace of growth has some experts now wondering if we can expect a further rate increase.

Victoria business leaders will have the opportunity to hear directly from the Bank of Canada, as The Chamber hosts the release of the Bank’s Economic Progress Report the day after the rate announcement.

Statistics Canada says household spending was up, specifically durable goods such as vehicles and clothes as well as travel. At the same time, investment in housing is down 3.9% with less new construction and renovations taking place across the country. Businesses are also investing less in machinery and equipment.

The Consumer Price Index was 4.4% in April, more than twice the target rate of 2% that the Bank of Canada is working to achieve.

Tables are selling fast for the upcoming chance to attend in-person the Bank of Canada’s Economic Progress Report in Victoria.
 
The Greater Victoria Chamber of Commerce has secured the Victoria Convention Centre to ensure we have a large enough facility to meet anticipated demand for our June 8 event. The last time the Bank spoke live in Victoria, a sold-out Crystal Garden was filled with business and community leaders who had high praise for the experience.
 
“Our event is the day after what could be a crucial rate announcement, and we know many will want to better understand how the Bank makes its decisions,” Chamber CEO Bruce Williams said. “It’s not easy to secure an event of this importance. Business people across the country will have their eyes on Victoria, and it’s pretty cool that we get to experience it in-person.”
 
The Economic Progress Report will be broadcast live on. A press conference for national media will take place after the speech and Q&A session with Deputy Governor Paul Beaudry.

Big decision looms for Bank of Canada
 
With the next announcement on interest rates set for June 7, there are mixed opinions on what the bank will do.
 
Some analysts are calling for another rate hike to help mitigate the risk of high inflation, while other market strategists say they don’t forecast an increase next month.
 
On May 18, the Bank of Canada’s Financial System Review found three areas of concern in the economy.
 
The next scheduled event, after the interest rate announcement June 7, is the Economic Progress Report speech in Victoria on June 8.

Are you ready for the digital dollar?

The Bank of Canada is in the news this week, after announcing they’re working on something called a central bank digital currency or a digital Canadian dollar. The Bank wants to be ready, though there are still plenty of questions to answer before it becomes reality.

“If a digital Canadian dollar were issued, it would be money that every Canadian could use every day,” Bank Governor Tiff Macklem said.

A digital dollar wouldn’t replace bank notes, and like paper bills, it would not accrue interest or change in value. If the federal government asks for a digital dollar, the Bank wants to be ready to issue the currency. They’re asking Canadians for feedback through a survey running from May 8 to June 19.

“I’m sure the topic of a digital dollar will come up on June 8, in what’s shaping up to be a really exiciting and historic event for Victoria,” Chamber CEO Bruce Williams said.

The Chamber hosts the Bank of Canada’s Deputy Governor Paul Beaudry as he delivers the next Economic Progress Report from Victoria. The reports earn national coverage and offer insight into the Bank’s analysis of where the economy is heading. See more details under Upcoming Business Leaders Luncheons below.