Welcome to our Weekly Digest – stay in the know with some recent news updates relevant to business and the economy.
Bank of Canada cuts interest rate again and may make more cuts if inflation continues to drop
The Bank of Canada has reduced its key interest rate to 4.5 percent, marking a significant move in its efforts to manage the country’s economic conditions. Governor Tiff Macklem explained that the rate cut aims to control inflation and support economic stability, with current economic indicators justifying this decision.
Macklem also suggested that further rate cuts could be expected if inflation continues to decrease. He emphasized the central bank’s close monitoring of inflation trends and other economic factors to guide future decisions.
China plans to raise the retirement age. Could Canada do the same?
China is among several countries planning to gradually increase the statutory retirement age due to aging populations pushing governments to reform their pension systems. Experts suggest that delaying retirement could also benefit Canada, which is facing labor shortages and a record low fertility rate.
The proposed changes aim to ensure the financial sustainability of pension plans by extending working years and reducing pressure on these systems. In Canada, raising the retirement age is being debated as a potential solution to current economic challenges, including a shrinking workforce and rising demands on social services.
Lawsuits planned to get back COVID benefit overpayments.
The Canada Revenue Agency (CRA) is intensifying efforts to recover overpayments of pandemic-related benefits. Starting in July, the CRA will issue legal warnings to individuals who received overpayments from programs like the Canada Emergency Response Benefit (CERB), the Canada Recovery Benefit (CRB), and the Canada Worker Lockdown Benefit.
These actions are part of the CRA’s plan to ensure funds distributed incorrectly during the pandemic are recovered. By issuing legal warnings and potentially escalating to more direct recovery actions, the CRA aims to maintain the integrity of the benefit programs and ensure proper management of public funds.
Canada’s productivity is behind other G7 countries. Removing internal trade barriers could help boost the economy.
Canada’s productivity is lagging behind its G7 counterparts, with the Canadian Federation of Independent Business (CFIB) attributing this issue partly to interprovincial trade barriers. According to the CFIB’s latest State of Internal Trade report, these barriers negatively impact the economy, and many small businesses believe that removing them could significantly boost productivity and growth.
The CFIB is urging all levels of government to collaborate and take decisive action to eliminate these internal trade barriers. They argue that doing so is essential for improving Canada’s economic performance and would benefit both small businesses and the broader economy.
Consumer bankruptcies in Canada reach 4-year high due to rising interest rates.
Canadian insolvencies rose in the second quarter of the year, reaching a four-year high due to higher interest rates and inflation, which continue to strain Canadians financially. Data from Canada’s Office of the Superintendent of Bankruptcy (OSB) show a significant increase in both business and consumer bankruptcies and proposals.
In the second quarter of 2024, total insolvencies surged by 13.3 percent compared to the same period last year, highlighting the growing financial struggles of individuals and businesses. The OSB data underscore the impact of rising interest rates and persistent inflation on the solvency of Canadians.
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