The Bank of Canada continued its tightening cycle last week by announcing a 75-basis-point increase in its overnight rate target. That target is now above the top end of the Bank’s estimate of the “neutral rate” of two to three per cent. But how fast will the rate go from here?

The neutral rate is the rate the Bank thinks would be appropriate for an economy producing at full capacity, with inflation running at two percent. Most economists and market-watchers believe the overnight rate needs to go beyond neutral in order to fight inflation. Despite a one-month drop in the year-over-year increase in the CPI from 8.1 per cent in June to 7.6 per cent in July, inflation is a long way above the top end of the one-to-three per cent…

Une euphorie postpandémique s’empare de nos politiciens en campagne électorale. On aimerait y croire, mais les baisses d’impôt promises par la Coalition avenir Québec (CAQ) et les libéraux posent problème.

Ces annonces plairont au plus grand nombre, mais elles aggraveront l’inflation, que ces partis veulent pourtant soulager. Que vaudra une réduction d’impôt, si elle entraîne des paiements hypothécaires plus élevés ?

Ce n’est pas le moment de stimuler une économie en surchauffe, alors que la Banque du Canada hausse les taux d’intérêt pour calmer le jeu.

Cette générosité soudaine provient d’une lecture avec des lunettes roses du Rapport préélectoral sur l’état des finances publiques du Québec.

Ses projections…

Last week’s inflation numbers for July gave those of us who analyze the outlook for prices plenty to think about. The headline inflation number, which measures the increase in prices over the last 12 months, clocked in at an unruly 7.6 per cent, while the month-to-month inflation figure came in at a much better-behaved 0.13 per cent, which works out to an annualized 1.6 per cent, which is below the Bank of Canada’s two per cent target.

The June-to-July change was mostly driven by a fall in energy prices, which may or may not be repeated and could easily be reversed if the Russo-Ukraine war or other international conditions worsen. People understand that energy prices go up and down. But the July result does underscore the…