Good evening, let’s start with today’s top stories:
The Bank of Canada increased its benchmark interest rate by one percentage point today, the most aggressive rate hike since 1998 and a larger move than investors and private-sector economists were expecting.
The central bank’s governing council voted to raise its policy rate to 2.5 per cent from 1.5 per cent. This is the fourth consecutive interest rate increase since March, and puts the Bank of Canada ahead of its peers when it comes to tightening monetary policy in the face of the most significant inflation shock in a generation.
The bank signaled that interest rates will need to keep rising to cool down Canada’s overheated economy and slow the pace of consumer price growth.
- Bank of Canada’s interest rate hike to further slow housing market
- Explainer: How does the Bank of Canada’s interest rate hike affect variable-rate mortgages?
- Rob Carrick: Worried about rising interest rates, inflation or housing? Five ways to calm your mind
- U.S. inflation hits new 40-year high in June as gas, food prices surge
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Trudeau defends two-year deal to repair Russian pipeline turbines despite sanctions on Moscow
Prime Minister Justin Trudeau said the Canadian government’s decision to import and repair Russian pipeline turbines for up to two years was “very difficult,” but necessary to avoid an energy crisis in Europe.
The Prime Minister said Canada ultimately decided to circumvent its own sanctions against Russia because it did not want punitive rules aimed at Russian President Vladimir Putin’s administration to end up hurting natural gas consumers in European countries.
Russia last month cited the delayed return of natural gas turbine equipment, which Siemens Energy had been servicing in Canada, as the reason it decided to reduce the flow of natural gas through Nord Stream 1. The pipeline, which runs from Russia to Germany, was cut to 40-per-cent capacity. It’s since been shut down for maintenance.
- Ottawa’s deal to allow repair of Russian-owned turbines covers longer period than previously disclosed
- Campbell Clark: A turbine tussle and a warning to allies against complacency in backing Ukraine for the long haul
Canadians’ after-tax income surged in 2020 with help from COVID-19 benefits, new census shows
Fewer Canadians received employment income in 2020 as COVID-19 upended the labour market, but pandemic support programs more than offset losses for many households, leading to a drop in income inequality, according to census results published today.
There were roughly 114,000 fewer Canadian adults who received employment income in 2020 than in 2019, with median earnings falling 2.1 per cent to $37,200. The decline in those receiving employment income was starkest for older Canadians, aged 55 and higher.
Even so, median after-tax household income grew 9.8 per cent to $73,000 in 2020 from 2015 – much faster than growth of 4.5 per cent from 2010 to 2015.
Statistics Canada said the acceleration was owing to pandemic relief programs that compensated for earnings losses, along with increases in child benefits.
ALSO ON OUR RADAR
Families question decision to shield spouse of Nova Scotia shooter from cross-examination: More than two years after the worst mass shooting in Canadian history, Lisa Banfield, the common-law spouse of the gunman responsible for the April, 2020, rampage in rural Nova Scotia, will finally testify Friday about what she saw and heard before and during the attack that left 22 people dead. But a decision by the Mass Casualty Commission to shield her from cross-examination has once again shaken faith in the inquiry.
More price hikes coming to grocery stores this fall: Canadian food suppliers are once again letting grocery retailers know of upcoming price hikes. The notices signal more price increases will hit grocery stores this fall in a year that has already seen nearly double-digit increases in food costs.
Fourth COVID-19 vaccine open to all adults in Ontario: Amid a growing seventh wave of the COVID-19 virus, Ontario Chief Medical Officer of Health Kieran Moore said the province will offer second booster shots of Pfizer or Moderna to everyone between 18 and 59 years old who received their last dose more than five months ago.
Belgian firm to build $1.5-billion EV battery factory in Ontario: Belgian metals refiner Umicore SA is building a $1.5-billion factory near Kingston, Ont., to produce components for electric vehicle batteries, the latest in a series of Canadian investments by automotive manufacturers.
Charlie Montoyo fired as Blue Jays manager: The Toronto Blue Jays have fired manager Charlie Montoyo. He will be replaced by bench coach John Schneider as interim manager for the rest of the season. Montoyo earned a 236-236 record over four seasons as Toronto’s manager. The Blue Jays have a 46-42 record this season and currently hold the third and final wild card spot in the American League. However, they have lost eight of their past 10 games.
- Cathal Kelly: With Charlie Montoyo firing, the Blue Jays get their fall guy, but now the brain trust is exposed
MARKET WATCH
Canada’s main stock index tumbled today after the country’s central bank raised rates by an unexpected one percentage point and lifted its inflation forecast. The S&P/TSX Composite Index was down 0.34 per cent at 18,615.19.
The S&P 500 index ended lower after fluctuating for much of the session as investors digested hotter-than-expected U.S. inflation data, which fuelled fears that the U.S. Federal Reserve could raise key interest rates by as much as 100 basis points (one percentage point) later this month. The S&P 500 ended 0.4 per cent lower, its fourth consecutive drop. The Dow Jones Industrial Average fell 0.7 percent, while the Nasdaq Composite dropped 0.2 per cent.
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TALKING POINTS
“If the provinces don’t want to answer to Uncle Ottawa for how they run their health care systems, they can’t also depend on it for their allowance.” - Andrew Coyne
LIVING BETTER
How credit card travel rewards beat cashback
In the lockdown phase of the COVID-19 pandemic, the sensible thing to do with your credit-card rewards was to switch to cashback from travel points. The public-health challenge still lingers, but an easing of restrictions has now led to a travel boom. For some help in getting up to speed on the latest developments in travel rewards, check out this Q&A Rob Carrick did with reward programs expert Barry Choi.
TODAY’S LONG READ
Amarjit Dhadwar and Shaun Heaps help prepare a helicopter for take-off at the West Coast Flying Club.Jimmy Jeong/The Globe and Mail
After volunteering to help during the fall’s devastating floods, B.C. pilots form permanent disaster relief team
When rivers of rain fell over British Columbia last November, destroying highways and marooning people across the southern half of the province, it wasn’t the army that came to the rescue of the suddenly stranded.
When troops did finally arrive – four days after the flooding began – their mandate wasn’t rescuing motorists or ferrying food, diapers and dog kibble to communities suddenly cut off from B.C.’s highway system. They were deployed to Abbotsford, to build an emergency levee to help save the Sumas Prairie.
So the job of making food deliveries and transporting people out of the flood zone fell to a ragtag group of volunteer pilots.
Evening Update is written by Omair Quadri. If you’d like to receive this newsletter by e-mail every weekday evening, go here to sign up. If you have any feedback, send us a note.