The economist reveals his latest predictions for the economy and implications for markets
CIBC’s Benjamin Tal was one of the few to correctly predict the BoC’s rate moves so far this year. Here is what he’s forecasting nowMajor North American equity indexes are at or near record highs. With the earnings season largely behind us, investors will be focusing on economic data and announcements by central banks to provide direction to the markets.
First of all, I think it’s very important to understand what we are talking about when we say inflation. We have a situation in which the Bank of Canada can justify whatever stance it wants to justify based on the numbers. That’s why they justified not cutting in April or March because the CPI-trim rate, the CPI-median rate that they’re following were too elevated but other metrics were falling or less elevated.Let’s look at those inflation numbers and go back to your question, “is inflation low enough?” I say absolutely.
At the end of the day, it’s a biased bank. You give them two options, recession versus inflation. They will take a recession, which means that they will choose to overshoot. And that’s exactly what’s happening now. The U.S. economy is stronger than expected, demand is stronger than expected. The labour market is still relatively tight. There are some clear signs of slowing in the labour market, which is really important. The quits rate is lower than it was in 2019 and job openings are back to where they were in 2019. If you look at the credit to industrial and commercial entities, growth is basically zero.
Now, people say back then the Fed raised by 300 basis points now they’ve increased by 500 basis points. But I say that 300 back then is equivalent to 500 today because monetary policy back then was more effective. They had more debt back then, and back then there was more debt was in variable rate mortgages. Now, most of it is in the fixed 30-year term. So now monetary policy is not as effective as it was in the past. Therefore, 300 basis points back then is equivalent to 500 now.
In Canada, you have 100 basis points of cuts forecast for this year and 125 for next year. How do your expectations differ for the Federal Reserve? We believe that the economy will slow down more significantly because some of the growth that we have seen until now reflected supply chain growth, which will not repeat itself. We think that the consumer is weaker-than-expected. Remember that we still have 50 per cent of mortgage holders who will be refinancing their mortgages, which is going to be a major shock to the economy and we lead to higher savings rates. I think the labour market is even weaker than perceived.
However, the fact that we are not building now, looking out two years from now, three years from now, interest rates will be lower, demand will be there.
Canada News Breaking News Video Canadian Breaking News Breaking News Globe And Mail Breaking News Globe And Mail Canada News Photos World News Local News National News Us News Foreign News Sports News Arts News Life News Lifestyle Canada Traffic Canada Weather Trudeau Government Federal Government Canada Sports Canada Sports News Politics Politics News Political News Political Opinion Environment Economy Technology Education Travel Canada Alberta Bc British Columbia Manitoba Ontario Quebec Nova Scotia Pei New Brunswick Newfoundland And Labrador Nunavut Northwest Territories Yukon Globe And Mail
Canada Latest News, Canada Headlines
Similar News:You can also read news stories similar to this one that we have collected from other news sources.
For many Israelis and Palestinians, Benjamin Netanyahu, Mahmoud Abbas are an obstacle to peaceMr. Netanyahu is ideologically opposed to the creation of a Palestinian state, while Mr. Abbas is deeply unpopular and stands little chance of selling a peace deal
Read more »
Netanyahu on US threat to withhold arms: Israel will fight with its 'fingernails' if neededJERUSALEM (AP) — Prime Minister Benjamin Netanyahu said Thursday that a U.S.
Read more »
Netanyahu on US threat to withhold arms: Israel will fight with its 'fingernails' if neededJERUSALEM (AP) — Prime Minister Benjamin Netanyahu said Thursday that a U.S.
Read more »
Netanyahu on US threat to withhold arms: Israel will fight with its 'fingernails' if neededJERUSALEM (AP) — Prime Minister Benjamin Netanyahu said Thursday that a U.S.
Read more »
Netanyahu on US threat to withhold arms: Israel will fight with its 'fingernails' if neededJERUSALEM (AP) — Prime Minister Benjamin Netanyahu said Thursday that a U.S.
Read more »
I Don't Know Who You Are is a visceral race against time for a critical drugA close up of Benjamin
Read more »