City of Windsor Financial Rating Affirmed at ‘AA+’ by S&P

S&P Global Ratings has affirmed its long-term issuer credit and senior unsecured debt ratings for the City of Windsor as double A plus (‘AA+’) for the fifth consecutive year with a stable outlook. ‘AA’ is the second highest rating of the ten utilized by S&P and signifies a very strong capacity to meet financial commitments.

“Once again, the City of Windsor has maintained our favourable AA+ Bond Rating, which remains a solid vote of confidence in our unshakeable commitment to Investing Responsibly and Protecting Our Future with a continued focus on strong financial management and strategic investments. In the face of continuing global economic uncertainties and the ongoing tariff and trade war brought about by the U.S., City Council is focused on Windsor’s long game. We are investing more than ever before in the infrastructure, assets, and amenities that matter most to Windsorites, while working to attract new investments, businesses, residents and visitors to our community. We’re accomplishing that while ensuring that Windsor remains one of the most affordable cities of its size in Ontario. Through innovative strategies addressing economic development, growth and expansion, housing, neighbourhood revitalization, community safety and wellbeing, infrastructure enhancements, and more, we continue pursuing all opportunities that support a robust local economy, and to navigate the unique challenges that come with the unprecedented growth and development in our international gateway community.” – Windsor Mayor Drew Dilkens

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Ontario Urges Bank of Canada to Lower Interest Rates to Support Job Creation

Vic Fedeli, Minister of Economic Development, Job Creation and Trade, issued the following statement on today’s monthly employment release by Statistics Canada.

“Ontario has added nearly 200,000 jobs this year, highlighting the resilience of our economy. However, last month’s job numbers remind us of the challenges that persist. These results, once again, underscore the need for the Bank of Canada to lower interest rates, a critical step in supporting job creation, rebuilding our economy and creating opportunities for workers across the province.

While urging the Bank of Canada to take action, our government remains focused on keeping costs down for families and workers and attracting new investments, better jobs and bigger paycheques. We continue to call on the federal government to remove its costly carbon tax, which is raising costs for hardworking families, and we will continue to support Ontario families with measures like our upcoming $200 taxpayer rebate, which will be sent to all eligible taxpayers in Ontario as well as their children. We are also continuing to make targeted investments in skills training and advancing construction on roads, highways and other critical infrastructure to support long-term economic growth.

In the face of global uncertainty, we are also working to strengthen Ontario’s trade and investment relationships worldwide. Under Premier Ford’s leadership, we’ve been actively engaging with U.S. partners to reject protectionism and champion a ‘Buy Can-Am’ approach to create jobs and opportunities for workers in both countries.

Looking ahead, our government remains focused on creating the conditions for businesses to grow, thrive and hire, while strengthening Ontario’s role as a trusted global partner in an uncertain economy.”

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Bank of Canada Reduces Policy Rate by 25 Basis Points

The Bank of Canada today (June 5, 2024) reduced its target for the overnight rate to 4¾%, with the Bank Rate at 5% and the deposit rate at 4¾%. The Bank is continuing its policy of balance sheet normalization.

The global economy grew by about 3% in the first quarter of 2024, broadly in line with the Bank’s April Monetary Policy Report (MPR) projection. In the United States, the economy expanded more slowly than was expected, as weakness in exports and inventories weighed on activity. Growth in private domestic demand remained strong but eased. In the euro area, activity picked up in the first quarter of 2024. China’s economy was also stronger in the first quarter, buoyed by exports and industrial production, although domestic demand remained weak. Inflation in most advanced economies continues to ease, although progress towards price stability is bumpy and is proceeding at different speeds across regions. Oil prices have averaged close to the MPR assumptions, and financial conditions are little changed since April.

In Canada, economic growth resumed in the first quarter of 2024 after stalling in the second half of last year. At 1.7%, first-quarter GDP growth was slower than forecast in the MPR. Weaker inventory investment dampened activity. Consumption growth was solid at about 3%, and business investment and housing activity also increased. Labour market data show businesses continue to hire, although employment has been growing at a slower pace than the working-age population. Wage pressures remain but look to be moderating gradually. Overall, recent data suggest the economy is still operating in excess supply.

CPI inflation eased further in April, to 2.7%. The Bank’s preferred measures of core inflation also slowed and three-month measures suggest continued downward momentum. Indicators of the breadth of price increases across components of the CPI have moved down further and are near their historical average. However, shelter price inflation remains high.

With continued evidence that underlying inflation is easing, Governing Council agreed that monetary policy no longer needs to be as restrictive and reduced the policy interest rate by 25 basis points. Recent data has increased our confidence that inflation will continue to move towards the 2% target. Nonetheless, risks to the inflation outlook remain. Governing Council is closely watching the evolution of core inflation and remains particularly focused on the balance between demand and supply in the economy, inflation expectations, wage growth, and corporate pricing behaviour. The Bank remains resolute in its commitment to restoring price stability for Canadians.

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Understanding the Bank of Canada’s Policy Rate and Quantitative Tightening Strategy

The Bank of Canada, the nation’s central financial institution, has maintained its target for the overnight rate at 5% and simultaneously continued its policy of quantitative tightening. This significant decision has far-reaching implications on the nation’s economy and its financial landscape.

The Bank of Canada is the nation’s premiere financial institution that oversees all monetary policies and economic activities. It has regional offices spread across the country, including a head office, and it is known for its rich history and deep roots in the Canadian financial system.

The Bank of Canada is entrusted with several crucial roles, including monetary policy, financial system supervision, currency management, funds management, and retail payments supervision.

One of the bank’s highlighted initiatives is the exploration of a digital form of the Canadian dollar, also known as a central bank digital currency (CBDC). Additionally, the bank is actively taking steps to understand the impacts of climate change on the economy and reducing its environmental footprint.

The Bank of Canada’s policy rate, also known as the overnight rate, is a key interest rate in the financial market. The Bank has decided to maintain this rate at 5%, keeping the Bank Rate and the deposit rate at 5¼% and 5% respectively.

Quantitative tightening is a monetary policy employed by central banks to decrease the amount of liquidity within the economy. The Bank of Canada is continuing this policy, implying a reduction in the amount of money circulating in the economy.

The decision to maintain the policy rate and continue with quantitative tightening is influenced by the global economic scenario. The global economic growth experienced a slowdown in the fourth quarter, with US GDP growth also slowing down but remaining robust and broad-based.

In Europe, the economic growth was flat towards the end of the year after contracting in the third quarter. Despite this, inflation in the United States and the euro area continued to ease.

This global economic situation has led to an increase in bond yields since January while corporate credit spreads have narrowed. Equity markets have also seen a sharp rise, with global oil prices being slightly higher than was assumed in the January Monetary Policy Report (MPR).

The Canadian economy grew more than expected in the fourth quarter, although the pace remained weak and below potential. Real GDP expanded by 1% after contracting 0.5% in the third quarter. A strong increase in exports boosted growth. However, employment continues to grow more slowly than the population, indicating an economy in modest excess supply.

CPI inflation eased to 2.9% in January, as goods price inflation moderated further. Shelter price inflation remains elevated and is the biggest contributor to inflation. The Bank continues to expect inflation to remain close to 3% during the first half of this year before gradually easing.

The Governing Council decided to hold the policy rate at 5% and to continue to normalize the Bank’s balance sheet. The Council is still concerned about risks to the outlook for inflation, particularly the persistence in underlying inflation. The Bank remains resolute in its commitment to restoring price stability for Canadians.

The next scheduled date for announcing the overnight rate target is April 10, 2024. The Bank will publish its next full outlook for the economy and inflation, including risks to the projection, in the MPR at the same time.

The Bank of Canada’s decision to maintain its policy rate and continue its quantitative tightening strategy is a pivotal move that will shape the nation’s financial future. By closely monitoring global and domestic economic trends, the Bank is ready to make necessary adjustments to ensure the stability and prosperity of Canada’s economy.

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Bank of Canada Upholds Policy Rate Amid Ongoing Quantitative Tightening

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On January 24, 2024, the Bank of Canada announced its decision to maintain the target rate for the overnight rate at 5% while continuing its quantitative tightening policy.

Global Economic Overview

The global economic landscape is witnessing a gradual slowdown, with inflation rates easing across most economies.

United States

In the United States, economic growth has outperformed expectations, however, predictions suggest a slowdown in 2024 due to a dip in consumer spending and a decrease in business investment.

Euro Area

In the Euro area, the economic climate appears to be in a gentle contraction phase.

China

In China, low consumer confidence coupled with policy uncertainty is expected to limit economic activity.

Oil Prices

Oil prices stand approximately $10 per barrel lower than the assumed figures in the October Monetary Policy Report (MPR).

Financial Conditions

Financial conditions have seen an improvement, effectively counteracting the tightening that took place in the previous fall.

Global GDP Growth Forecast

The Bank has projected the global GDP growth to be 2½% in 2024 and 2¾% in 2025, following the 3% pace in 2023.

Inflation Rates and Central Bank Targets

With the expected softer growth this year, inflation rates in most advanced economies are expected to decrease gradually, hitting central bank targets by 2025.

Canada’s Economic Climate

In Canada, the economy has been stagnant since mid-2023 and the growth is anticipated to remain near zero through the first quarter of 2024.

Consumer Spending and Business Investment

Both consumer spending and business investment have seen a downturn in response to higher prices and interest rates.

Labour Market Conditions

Labour market conditions have lightened, with job vacancies returning to near pre-pandemic levels and new jobs being generated at a slower pace than population growth. However, wage growth is still hovering around 4% to 5%.

Economic Growth Projection

Economic growth is expected to gradually gain momentum around mid-2024.

Household Spending, Exports and Business Investment

By the second half of 2024, it is anticipated that household spending will pick up and exports and business investments will see a boost due to the recovery in foreign demand.

Government Spending

Government spending is set to significantly contribute to growth throughout the year.

GDP Growth Forecast

Overall, the Bank predicts GDP growth of 0.8% in 2024 and 2.4% in 2025, roughly unchanged from its October projection.

CPI Inflation

CPI inflation concluded the year at 3.4%. Shelter costs remain the principal contributor to above-target inflation.

Inflation Expectations

The Bank anticipates inflation to stay around 3% during the first half of the year before gradually easing, returning to the 2% target by 2025.

Policy Rate and Balance Sheet Normalization

Given the economic outlook, the Governing Council decided to maintain the policy rate at 5% and to continue the normalization of the Bank’s balance sheet.

Concerns and Commitments

The Council remains concerned about risks to the inflation outlook, especially the persistence in underlying inflation. The Bank stresses its commitment to restoring price stability for Canadians.

Future Announcements

The next scheduled date for announcing the overnight rate target is March 6, 2024. The Bank will publish its next comprehensive outlook for the economy and inflation, including risks to the projection, in the MPR on April 10, 2024.

This article is for informational purposes only and does not constitute financial advice. Always do your own research and consult with a professional before making any financial decisions.

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