Slowing Inflation Primes G-7 Central Banks for June
Inflation-related releases across the Group of Seven will prime central bankers for crucial June interest-rate decisions, just as they meet in Italy to discuss the state of the world economy.
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Inflation-related releases across the Group of Seven will prime central bankers for crucial June interest-rate decisions, just as they meet in Italy to discuss the state of the world economy.
Big US bond investors have been aggressively shifting money into long-dated notes, betting that the unloved asset class will be one of the winners from eventual interest rate cuts.
A measure of underlying US inflation cooled in April for the first time in six months, a small step in the right direction for Federal Reserve officials looking to start cutting interest rates this year.
Emerging-market currencies dipped Friday on dwindling optimism over Federal Reserve rate cuts, paring their fourth-straight week of gains.
The owner of a historic office building in Manhattan’s Financial District has filed bankruptcy to sell the property, which has been subject to foreclosure and suffered from a lack of tenants due to the Covid-19 pandemic.
Aug 11, 2016
One of Canada’s top economists is warning new measures to cool Canada’s two hottest housing markets could come at the expense of economic growth.
In a research note published Thursday, CIBC Chief Economist Avery Shenfeld said cracking down on the sector which accounts for the largest portion of domestic GDP could put the brakes on what tepid growth the Canadian economy currently boasts.
“While some might welcome a cooling-off period for these markets, the same can’t be said for the Canadian economy,” he wrote in the report. “Interest rate hikes or much tougher mortgage policies could put a damper on house prices, but at the expense of economic growth.”
Shenfeld also disputed the positive talk surrounding the wealth effect from rising home prices, given it benefits existing homeowners but puts a damper on consumption among prospective homebuyers, who face a 23-year saving period for an average Vancouver home, according to advocacy group Generation Squeeze.
“A younger generation of yet to-be homeowners faces the need for greater savings to build a down payment, cutting into their room for consumption,” he wrote. “The lack of affordable housing for the next generation of workforce entrants could act as an impediment to business growth, or encourage businesses to locate elsewhere.”
Shenfeld said there are solutions that could in fact be positive for growth, if governments focus on the supply side of the equation instead of tempering demand.
“Releasing more land for single family homebuilding, and speeding the approval process for new construction, would be part of that process,” he wrote. “Improving urban transit, so that land outside the city core is a closer substitute for the inner-city locations where prices are reaching the greatest heights, would do the same.”
Shenfeld said the lingering impact of the U.S. subprime mortgage crisis has seeped into the psyche of housing market observers, but Canada can avoid the same fate with careful planning.
“The memories of the US financial crisis have left the impression that all house price booms end badly for the broader economy,” he wrote. “With the right policy mix, it needn’t be so.”