“Just because the Bank of Canada hasn’t altered interest rates for more than two years doesn’t mean policy makers have been idle.
With little room to manoeuvre on policy, Governor Mark Carney and his deputies have been conducting something of a stress test on the Canadian economy. Their speeches, interest-rate announcements, and quarterly reports have become the most important sources of insight into Canada’s economic strengths – and more importantly, its weaknesses,” Kevin Carmichael wrote for The Globe and Mail on Wednesday. Carmichael continued, “There is no more galling weakness than the gap between the world price of oil and the much lower price Western Canadian oil fetches in the United States. It’s the opportunity cost of all opportunity costs. Back in April, when the central bank brought the price difference to a wider audience, the world price of oil was about $35 (U.S.) a barrel higher than Western Canadian Select. According to Charles St-Arnaud, a former Bank of Canada economist who now works for Nomura in New York, the spread now is about $50, a shift that is costing Canada about $1.5-billion a month… …’Our challenge is to develop our commodities intelligently and sustainably and to ensure that the whole country benefits,’ Tiff Macklem, the Bank of Canada’s senior deputy governor, said in a speech earlier this month in Kingston, Ont. “Infrastructure investments in pipelines and refineries to get Western heavy oil…to Central Canada and to foreign markets would bring more of the benefits of the commodity boom to more of the country.” Read the full article here. | Raymond Matt, CFP, CLU, TEP, CHS
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