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Douglas Porter: It’s time for the Bank of Canada to pull the trigger on an interest rate cut

Commentary
Bank of Canada Governor Tiff Macklem and Carolyn Rogers, Senior Deputy Governor hold a press conference at the Bank of Canada in Ottawa on Wednesday, March 6, 2024. Sean Kilpatrick/The Canadian Press

We have now reached a moment of truth for at least two major central banks. With the Federal Reserve all but certain to keep rates steady at the June federal open market committee meeting, and most likely into late July as well, the European Central Bank (ECB) and the Bank of Canada (BoC) must now decide whether to essentially go it alone at rate decisions tomorrow.

There actually doesn’t seem to be all that much debate at the ECB. Even with a mild upside disappointment in the early read on Euro area May inflation— both headline and core Consumer Price Index (CPI) came in a tick high at 2.6 percent and 2.9 percent, respectively— officials have heavily signalled a rate cut is coming on Thursday. Following the earlier lead of first Switzerland, then Sweden, the ECB is widely expected to clip its refinance rate 25 basis points to 4.25 percent, nearly two years after first lifting it from zero.

The picture for the Bank of Canada is much less clear-cut. With its much tighter linkages to the U.S. economy, it’s a much bigger decision for Canada to carve out a quasi-independent policy path. But, unlike the U.S. experience so far in 2024, Canada has seen a run of better-than-expected inflation results, cutting all major measures of core inflation to below a 3 percent annual pace, and below a 2 percent trend in the past three months.

And the final piece of the Bank of Canada’s puzzle—Q1 real GDP—came in much lighter than expected at 1.7 percent growth, on the heels of a big downward revision to the prior quarter to just 0.1 percent (from 1.0 percent). Even with a rebound in April, the bigger picture is that GDP is up less than one percent in the past year, compared with almost 3 percent year-over-year U.S. growth over the same period.

Graphic credit: Janice Nelson

In other words, the U.S. economy has outpaced Canada’s by more than 2 percent in the past year, a very wide gap indeed. The U.S. core consumer price index is running at 3.6 percent year-over-year, almost a full point above the comparable measure in Canada. And, the U.S., unemployment rate has nudged up a half point in the past year to a still-low 3.9 percent, while Canada’s jobless rate has jumped a full point to 6.1 percent. Reinforcing that message, the job vacancy rate in Canada has fallen all the way back to pre-pandemic levels at 3.4 percent. Pulling all these threads together, there is a very good case for the Fed to remain patient, but there is an equally good case for the Bank of Canada to begin trimming rates, forthwith.

Christopher Hume: When did airports become so unbearable?

Commentary
Delta passengers stand in line as the carrier slogged through day two of its recovery from a global computer outage Tuesday, Aug. 9, 2016, in Salt Lake City. (Rick Bowmer/AP Photo)

It’s unlikely French philosopher and playwright Jean-Paul Sartre had airports in mind when he declared that, “Hell is other people.” But then again, he might have. Certainly, he could have. No question the French existentialist’s famous words are borne out by the experience of the sullen hordes tramping through airports around the world or here in Canada; especially here in Canada, as we enter the season of summer travel.

Indeed, other than the torture of air travel itself, airports – the beginning and end of every trip – seem designed to inflict maximum discomfort and dislocation for the traveller. It’s not just the hurry-up-and-wait checking-in process or the indignity of the largely performative security protocols.  It’s not just the plastic furniture, or the unabashed retail rip-offs on offer at every turn. What lies at the heart of the horrid airport experience is its near total disconnection from reality. Neither here nor there, airports are all the same but different. They are everywhere, but nowhere.

Architects can’t be blamed entirely for the bloated non-places that modern airports have become, but they bear a major responsibility  for the creation of these most liminal of spaces. Their job is to help create an environment based on a series of our  assumptions about human behaviour; about who we are and what travellers  want.

But are the architects  right? Given the generally poor ratings users give airports, it seems not.

The most tedious part of a day at the airport is getting through security. This is the great leveller, where we strip down to go through a hazing process that clears us for entry into the inner sanctum. Though largely ineffective and often called “security theatre” , many experts try to convince us  that being patted down, prodded and X-rayed actually prevents terrorism. The irony of airport security is that it — not terrorist attacks — is the greater test of the freedoms we take for granted in countries like Canada.

At the airport, we are guilty until proven innocent.