Rémi Vivès, assistant professor of economics at Glendon College at York University, in Toronto.
Rémi Vivès, assistant professor of economics at Glendon College from York University, adds that detours will be costly, particularly in Europe, where road transport is now subject to the emissions trading system.
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“We must not be scattered everywhere!”: the Trudeau team gathered in Montreal
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So that, by definition, will increase transportation costs. There are other factors that will increase them, such as the drought at the Panama Canal, he says. The drop in water levels in this critical corridor reduces maritime transport traffic.
The C.D. Howe Institute's monetary policy council, of which Steve Ambler is a member, recommends that the Bank of Canada keep its key rate at 5% on Wednesday . As for the decisions that follow – in March, April and July – opinions are divided, reflecting the high degree of uncertainty surrounding these decisions.
This group of economists from major banks and universities advocates a gradual reduction in the key rate to 4.5% by July, then lowering it to 3.75% by January 2025 .
Most economists expect the first interest rate cut in March or April this year.
The Bank of Canada, for its part, may not want to comment too much on this. At this point, she must tell herself that it's better not to make too firm promises, says Mr. Ambler.
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Steve Ambler is an associate professor in the Department of Economics at UQAM and a member of the monetary policy council of the C.D. Howe Institute.
Jimmy Jean, chief economist at Desjardins Group, points out that, despite the rebound in inflation, the Canadian economy is slowing down. Retail sales fell 0.2% last November and Canadian businesses expect inflation to remain high for a few more years.
[Bank of Canada] surveys on business prospects and consumer expectations show that there is well-established pessimism .
A quote from Jimmy Jean, chief economist, Mouvement Desjardins
He explains, on the one hand, that there is still a certain persistence of inflation, particularly in terms of wages, which is struggling to moderate. But on the other hand, the Bank of Canada is seeing a rebalancing within the economy, according to him.
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The timetable for possible rate cuts therefore remains very uncertain, says Jimmy Jean. The central bank will have to ask itself the question: Are we putting more weight on what we see on the economic side or are we putting weight on inflation which is still too high?, launches the economist.
He adds that the message that the central bank will convey in its new report on monetary policy could lead it to revise its forecasts this year regarding the key rate.
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Jimmy Jean is vice-president and chief economist of the Movement Desjardins.
I think it is in the interest of the Bank of Canada to take a prudent position to protect its credibility, underlines economist Rémi Vivès of York University.
The objective of a central bank is also to smooth rates, so it is not to lower them today; today and, in two months, increase them again because we made a mistake.
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