Bruce Williams is CEO of the Greater Victoria Chamber of Commerce
Last June, the Bank of Canada met with the Gatineau Chamber of Commerce to release its June 2022 Economic Progress report. The news was bracing when it came out, and it seems like we’ve been living with the repercussions for a long time. This year that report will be presented at a Greater Victoria Chamber luncheon event happening June 8.
Interest rates needed to go up, we heard. For the third straight month, the Bank raised its policy interest rate by 50 basis points, to 1.5%, in an effort to throw cold water on an overheated economy. Inflation threatened to become a runaway train, striking fear in financial circles. The Bank was clear. They could not allow the idea of inflation to become entrenched. The lessons were harsh with history showing the destabilizing potential of persistent inflation as it reduces the value of your savings and erodes purchasing power.
One year ago, the Bank of Canada’s Economic Progress Report noted that “interest rate moves can take at least a year to have their full impact on inflation.” We’re seeing that impact now with talk of a coming recession and a plummeting Gross Domestic Product. What do the next 12 months hold for Canada’s economy? Time will tell. The Bank of Canada goes out of its way to be very clear — they are not in possession of a crystal ball (at least not one that can accurately predict the future). But they do try to communicate as clearly as possible. They want to help more Canadians understand the role of the Bank, and the tools it has to protect our economy. Their written promise is to “give Canadians confidence to pursue opportunity.” And they do it by “fostering economic and financial stability,” by “navigating relentless change” and by “helping grow our shared prosperity.”
The Bank’s last Economic Progress Report was released in March at a well-attended event hosted by the Manitoba Chambers of Commerce. At that time, the Bank had already raised its policy interest rate eight times and was starting to see positive signs that inflation was no longer rampant. Household spending was down, and the forces of supply and demand seemed to be returning to balance. However, near historic unemployment rates and ubiquitous concerns about labour shortages make it hard for the Bank to know if the economy has cooled enough. Inflation has dropped but will take many more months to reach its 2% target. In March, the Bank stopped increasing interest rates in a move that made national headlines.
What will it do in June? And what will the next Economic Progress Report have to say when it is released in Victoria by Bank of Canada Deputy Governor Paul Beaudry?
I’m looking forward to this historic event and hope to see many of our community’s business leaders in attendance. What a great opportunity to say, “I was there.” I’m sure it will be a story you can tell clients and colleagues for a long time. Better yet, it’s a chance to share a moment of history with clients and say “we were there.”
As well as the speech from the Bank of Canada, which will be attended by national media, the Chamber is hosting a fabulous luncheon, sponsored by Odlum Brown, City of Victoria and Grant Thornton. The Chamber Business Leaders Luncheons are renowned for connecting Greater Victoria’s business community and providing opportunities for deep insight from subject matter experts.
Don’t miss your chance to be there!
The column originally appeared in the May edition of the Business Examiner.