‘Worst-case' scenario may be avoided as business confidence rises: BoC
Deputy governor Sharon Kozicki was speaking to the C.D. Howe Institute in Toronto a day after the Bank of Canada held its benchmark interest rate steady at 2.75 per cent.
Bank of Canada governor Tiff Macklem on Wednesday said ongoing high levels of uncertainty tied to the trade dispute with the United States are a big factor keeping the central bank on hold while it waits for more information on the looming economic and inflation impact.
Kozicki spoke about how the Bank of Canada is leaning more on non-traditional sources of data to make those decisions, including surveys of businesses and consumers.
Heading into Wednesday's rate decisions, she said the central bank's consultations with businesses in sectors particularly affected by trade were informative.
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While those businesses still broadly expect economic activity to weaken in the months ahead, Kozicki said that, 'overall, firms believed that their worst-case tariff scenarios were much less likely to materialize than they reported earlier this year.
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'While uncertainty remains high, there was less talk of catastrophic outcomes.'
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Tariff fears boost Canada's Q1 exports but hurt consumer spending
The Bank of Canada started to lean on non-traditional data sources such as restaurant reservations and credit card transactions for more timely insights during the onset of the COVID-19 pandemic, Kozicki said, when backwards-looking retail data failed to capture the disruption.
In today's situation, tracking more granular data such as the volume of trucks crossing the Canada-U.S. border can give monetary policymakers a nuanced look at how the tariffs are impacting imports and exports between the nations, she said.
'Today, in the face of a global trade conflict, we've continued to use – and even expand our reliance on – non-traditional data,' Kozicki said.
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Heading into Bank of Canada's March interest rate decision, which landed in the early days of tariffs before broad exemptions offered both clarity and confusion, she said the central bank 'relied heavily' on survey data to inform its decision to cut the policy rate by a quarter point.
Kozicki said that while traditional macroeconomic data can paint a 'high-level picture,' that could mean the central bank misses 'how economic conditions are affecting different households and businesses.'
'While those data give a good view of the forest, they're not necessarily providing as clear a sightline to the trees. We want to be able to see both,' Kozicki said.
More recently, the Bank of Canada has foregone publishing a single, central forecast for the economy in its monetary policy report, instead providing two illustrative 'scenarios' for how the tariff situation might unfold.
Macklem said Wednesday that he still expects the Bank of Canada will be less forward-looking than normal as it charts a path for monetary policy.
The central bank's next interest rate decision and monetary policy report are due on July 30.
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Skipping the U.S. and taking a vacation to East Coast this year? It will cost you
In September 2024, Natasha Beitman Brener and her husband decided to take a three-week vacation to Canada's East Coast. Beitman Brener, a lawyer in Kingston, Ont., spent about six months planning the trip, looking at various options to stay in Prince Edward Island, Nova Scotia and New Brunswick. 'We are young, we don't have all the money in the world, we have a mortgage. So we went on this trip and we thought, 'oh, this will be affordable compared to something like Japan' . … We were going to cook our own food,' she said in a recent interview. They rented a recreational vehicle in Montreal for about $6,000, and between campground parking fees, gasoline, groceries, park passes, a round of golf, and a couple of dinners out, Beitman Brener said the total added up to $15,000. 'It was the most incredible trip. We loved it. It was worth it. It was incredible. The East Coast is so extraordinary,' she said. 'But it was $15,000 and we talked to our friend — they went to Japan for three weeks for the same price, with flights. And I said to my husband, 'well, we could have gone to Japan for the same price.'' Story continues below advertisement This year, as a trade war grinds on with the United States, Canadians who decide to vacation within their country are realizing their patriotism comes with a hefty price tag — and some are choosing to scale back their plans. For Alick Tsui, a St. John's, N.L., resident, a recent five-day, two-person trip to Port Rexton, N.L., cost him about $3,000. He is avoiding spending his dollars in the United States because of U.S. President Donald Trump's trade war and comments of annexing Canada. But high prices are forcing him to cut costs for future trips in Canada. 'Before I would stay for four nights, now I may cut it down to three nights. But that won't change my plan to travel.' Get daily National news Get the day's top news, political, economic, and current affairs headlines, delivered to your inbox once a day. Sign up for daily National newsletter Sign Up By providing your email address, you have read and agree to Global News' Terms and Conditions and Privacy Policy Tsui said he and his wife try to save money with 'economical' lunches from gas stations. 'But nighttime, we try to find whatever we can to have a good meal. Not expensive, but a good meal,' he said. The couple went to Vietnam and Thailand earlier this year for about 10 days; that trip cost about one-third the price that he usually pays for a week's vacation in Canada. Beitman Brener, meanwhile, says she wanted to take a mother-daughter vacation this month after the lawyer had some unexpected time off. The duo sought to travel within Canada on a budget of $3,000 for four nights and five days. They too are avoiding travelling to the United States. Story continues below advertisement She looked into several locations, including Quebec City and Manitoulin Island in Ontario, but — even with sharing a hotel or Airbnb room — their accommodation costs would have been about $3,000. Along with food and gas, the total would have been about $6,000, she said. They couldn't justify the cost so they chose to spend two nights at a boutique hotel in their hometown. The fact each vacation has to be planned down to every meal because of high costs has removed some of the joy of taking a spontaneous holiday in Canada, she said. A scan of individual round trip flights from Toronto to cities on the East Coast for the week of Aug. 18 -23 showed prices to Halifax ranging from around $700 for Flair Airlines to nearly $1,700 for WestJet; about $1,200 via Air Canada to $2,500 via Air Transat to St. John's; and between $1,500 and $3,000 on Air Canada to Charlottetown. A vehicle rental for five days the week of Aug. 18 -23 in Halifax, St. John's, and Charlottetown ranged from an average of $1,500 for an SUV to $1,000 for a sedan. For the week, hotel rooms in Halifax, St. John's and Prince Edward Island ranged from around $200 a night to $500. Richard Powers, associate professor at University of Toronto's Joseph L. Rotman School of Management, said two main reasons can help explain why travel within Canada is so expensive — lack of competition among airline services and fallout from COVID-19. Story continues below advertisement Airlines haven't reinstated some of routes they cut down at the height of the pandemic, he said. How long the fallout from COVID-19 will last is anybody's guess, Powers said. 'That's the million-dollar question.' When it comes to accommodation, he said the high prices can be blamed on minimal supply. 'I'm just booking Vancouver for the fall, and I'm having trouble finding a place for under $500 a night,' he said. 'That's a lot.' Restaurant bills in Canada add up — when compared with those in Europe — because of the tipping culture that adds 15 to 20 per cent for each meal, he said. With the push to support Canadian tourism, Powers said, people are willing to pay 'a bit of a premium.' 'How much premium is the question? And it's almost getting out of control.'
