Author archives

With expectations that the Bank of Canada might be taking another big step in December, enroute to a bit below neutral next year, the latest In Focus article lays out how to read the tea leaves in this easing cycle.

The American labor market looked like it reached a breaking point, and then it didn’t. The September jobs report and the recent revisions to income and the saving rate have provided plenty of ammunition to the no landing camp. But don't get too caught up in one report. The economy does not move in a straight line.

Ian is joined by two guests this week, Paul Beaudry (Professor of Economics at UBC and Former Deputy Governor of the Bank of Canada) and Ali Jaffery from CIBC Economics. The episode begins with Paul giving his view on the 50.0bps cut from FOMC, and what the most recent strong NFP means for the November meeting (hint: 25.0bps not 50.0bps). In contrast, when thinking about the Bank of Canada, Paul outlines his views that the preconditions for getting administered rates to a much lower are setting have been met for Canada, and provides his views for the October meeting (hint: 50.0bps, not 25.0bps). Ian discusses the need for a smaller balance sheet, while Ali gives an update on what higher energy prices mean for the BoC reaction function.

So you might think that by now, economists and central bankers would have a good handle on the trade-off between slack and inflation. You would be wrong. The debate about how much slack is enough to cure high inflation, or whether inflation expectations dominate, is far from settled...

Avery Shenfeld joins Ali Jaffery to discuss the US federal election and the future directions of trade policy under a Trump or Harris presidency, and what this would mean for the US and Canada.

Trade policy is now front and center in the US federal election, particularly for observers in Canada. Should he win, Donald Trump is promising a turn towards increased protectionism. Kamala Harris has come out against a broad increase in tariffs, but hasn’t been critical of the existing protectionism when it comes to China, and her record as a Senator shows a tilt towards tougher environmental standards in trade deals. A lot is at stake for Canada, but we see reasons to hope that we’ll steer clear of some of the darker scenarios out there.

Avery Shenfeld joins Ali Jaffery to discuss the labour dispute in Canada’s rail sector, what commodity prices are telling us about the global economy, and the future direction of monetary policy after Federal Reserve Chair Jerome Powell’s speech at Jackson Hole.

Ian is joined this week by Ali Jaffery in CIBC Economics. The duo begin the episode by taking stock of the intense market volatility seen over the past week, and whether what triggered the moved has a real fundamental basis. Ali discusses the other pockets of strength in the U.S. economy, concluding that the U.S is slowing but not enough to warrant non-standard sized cuts, like 50.0bps. Ian discusses the triggering of the Sahm rule within the context of Okuns Law, and Ali spends time talking about the underlying dynamics of the U.S. labour market. Ian and Ali go back-and-forth on what a faster Fed means for the Bank of Canada, ultimately landing on the view that the Bank can slow down if the Fed is speeding up. Ian finishes the episode discussing his favorite trades, and the implication of what a faster Bank does to 5yr yields, and thus 5yr mortgage rates.

With core inflation almost a half percentage point above target and inflation expectations well-behaved for sometime, is there a chance for the Fed rate cuts?

Ian is joined this week by CIBC’s Senior Economist, Ali Jaffery, and the focal point of the episode is to preview the upcoming Bank of Canada interest rate decision. Ali begins the episode outlining his view on forecast changes, and the likelihood that the Bank shifts from outcome-based guidance to forward-guidance. Ian talks about current market pricing for the BoC relative to the Fed, highlighting why he thinks there is too little priced in mid-2025. The pair do a deep dive on the impact of a 2025 trade war, specifically what it means for global growth and central bank responses. The episode finishes with Ian discussing reasons behind recent CORRA dislocations, and the need for a change in how QT is being managed.

Ali Jaffery joins Katherine Judge to discuss the outlook for shelter inflation in the US and Canada and why mortgage interest costs may increasingly distort the Bank of Canada’s preferred core measures of inflation.

Our latest issue of In Focus, by Avery Shenfeld and Ali Jaffery, titled “Seeking shelter from shelter inflation” offers evidence that points to a much tamer path ahead for the housing component of inflation in Canada and the US.

Avery Shenfeld joins Ali Jaffery to discuss why May’s inflation report needn’t deter the Bank of Canada from a rate cut in July, and the implications for bond market investors.

In this episode of Eyes on the Economy, Katherine Judge chats with Ali Jaffery about potential monetary policy divergence between the Bank of Canada and the Fed, and what it means for Canadian inflation.

This In Focus report looks at how far the Bank of Canada and the Fed can diverge. We find that the Bank of Canada could manage a 100bps divergence in the current context with only modest inflationary consequences.