ANDY BLATCHFORD (CANADIAN PRESS) - The Bank of Canada left its interest rate unchanged Wednesday in what could be just a brief pause along its gradual path to higher rates.
The central bank kept its benchmark at 1.5 per cent — but many experts have predicted it could introduce another increase as early as next month.
In a statement Wednesday, the Bank of Canada said more hikes should be expected thanks to encouraging numbers for business investment, exports and evidence that households are adjusting to pricier borrowing costs.
“Recent data reinforce governing council’s assessment that higher interest rates will be warranted to achieve the inflation target,” the bank said as it explained the factors around its decision.
“We will continue to take a gradual approach, guided by incoming data. In particular, the bank continues to gauge the economy’s reaction to higher interest rates.”
Bank of Canada governor Stephen Poloz has raised the rate four times since mid-2017 and his most-recent quarter-point increase came in July.
The bank can raise its overnight rate as a way to keep inflation from running too hot. Its target range for inflation is between one and three per cent.
The Bank of Canada said the economy has seen improvements in business investment and exports despite persistent uncertainty about the North American Free Trade Agreement and other trade policy developments. NAFTA’s year-long renegotiation, which resumes Wednesday in Washington, and other trade unknowns are under close watch by the bank.
The statement also pointed to other encouraging signs in Canada, including evidence the real estate market has begun to stabilize as households adjust to higher interest rates and new housing policies. Credit growth has moderated, the household debt-to-income ratio has started to move down and improvements in the job market and wages have helped support consumption, it said.
Heading into Wednesday’s rate decision, analysts widely expected Poloz to hold off on moving the rate — at least for now.
Last month, Poloz stressed the need to take a gradual approach to rate increases in times of uncertainty. He made the remarks during a panel appearance at the annual meeting of central bankers, academics and economists in Jackson Hole, Wyo.
“Taking a gradual, data-dependent approach to policy is an obvious form of risk management in the face of augmented uncertainty,” he said in his prepared remarks.
The Bank of Canada’s next rate announcement is scheduled for Oct. 24.
In its statement Wednesday, the bank also explained why it’s not going to raise the interest rate based on a recent inflation reading that showed the number had climbed to the top of its target range.
July’s unexpectedly high inflation number of three per cent was just a temporary spike in the data caused by airfare and gasoline prices, the bank said. It predicted inflation to edge back down towards two per cent in early 2019.
Core inflation, which omits volatile components such as pump prices, has remained firmly around two per cent, the bank noted.
Vancouver's warehouse lease rates are up 29 per cent in the first quarter year-on-year versus a global average of 3 per cent
(FINANCIAL POST) Forget that multi-million-dollar condo on Vancouver’s waterfront. Invest in a warehouse instead.
The Canadian city is the world’s hottest industrial real estate market with lease rates up 29 per cent in the first quarter year-on-year versus a global average of 3 per cent. IKEA and BMW AG are among companies that have snapped up the biggest industrial and logistics spaces, according to data provided by CBRE Group Inc.
“Industrial previously was almost like a forgotten asset class,” Jason Kiselbach, vice president and sales manager at CBRE Vancouver, said by phone. “But we haven’t even scratched the surface of the demand that’s going to continue to grow and put more pressure on the industrial market.”
E-commerce giants like Amazon.com Inc. are driving the need for more logistics and storage space in urban centres. Consumers demanding quick online deliveries are forcing companies to carry more inventory in the city where the last-mile deliveries take place. Those dynamics are playing out across Canada and the U.S.
“The big household retail names — you don’t realize that everything that they provide you has to come through a warehouse,” said Kiselbach. “The new retail is really warehouse direct sales.”
It’s great news for landlords but underscores how Metro Vancouver is running out of the kind of land that supports one in four jobs — and often some of the best-paying ones. Geographic constraints like mountains and water are one issue. But vast swathes of prime property near the city are reserved for agricultural use, while rezoning industrial land to residential use can mean a big bump in revenue for municipalities.
Industry forecasts indicate the region could run out of industrial land within a decade — some even say as early as 2020. If that happens, it could hollow out Vancouver’s economy, relegating the Pacific Coast city into a playground for wealthy retirees and tourists, Robin Silvester, chief executive officer of the Port of Vancouver, Canada’s biggest, has long warned.
A site needs to be at least 100,000 square feet to be of any use to most major industrial business. As of June, Vancouver had five, according to CBRE.
“These rising lease rates really speak to the strength of the economy — the growth in population, consumer spending,” says Kiselbach, but adds, “there’s definitely the potential that we might lose some economic benefits if we can’t address the supply issue.”
Vancouver approves tower that will block part of city's protected view of mountains — as long as it's all-rental
Vancouver city council approved a plan Tuesday for a new downtown tower that opponents say will block part of a long-protected view of the North Shore from the slopes that descend down to the south shore of False Creek.
PATRICK JOHNSON (VANCOUVER SUN) - In an amendment presented just before Tuesday’s final vote, Coun. Raymond Louie from Vision Vancouver called for the tower to be approved only if it is 100 per cent rental housing.
Vision councillors said they were wary of the original plan for the tower, but Louie’s amendment apparently changed opinion.
“(Louie’s amendment) makes things more palatable,” Mayor Gregor Robertson said.
The amended plan was approved in a 6-3 vote, with all five Vision councillors along with Robertson voting in favour. Non-Partisan Association councillors George Affleck and Melissa De Genova and Green councillor Adriane Carr voted against.
Two NPA councillors, Hector Bremner and Elizabeth Ball, excused themselves from the vote.
PavCo, the provincial Crown corporation that owns B.C. Place Stadium and land nearby, originally planned to build a tower at 777 Pacific Boulevard that would be the first of three mixed-use, but mostly residential condo buildings that would exceed the view-cone limit.
During council’s debate over the proposal and Louie’s amendment, Robertson called the intrusion into the view corridors “microscopic” and wondered why critics didn’t bring up other things that block view corridors, such as traffic lights and trees.
He said he supported the plan because it would add purpose-built rental housing to Vancouver’s tight housing market.
“The critical importance of rental housing can’t be overstated,” he said.
Carr said she was opposed to the project because of responses from the public that highlighted the importance of preserving view corridors, even if the intrusion in this case was minor.
“Like death by a thousand cuts,” she said.
“We certainly got the message loud and clear that this particular development takes Vancouver down the wrong path in terms of impacting negatively something very precious: the public access of public views to the mountains.”
Carr also said even making the tower all-rental wouldn’t make it affordable for most prospective renters.
“What we need is affordable housing, not just build, build, build any kind of housing.”
Nearly 2,000 people signed a petition opposing the tower plan, circulated by a group called SaveOurSkylineYVR.
More than 160 letters were filed with the city in opposition (compared to nine in support), including one from the Coalition of Vancouver Neighbourhoods, which represents 27 community residents’ associations.
“The view cones were established in 1989 to preserve views of mountains, and possibly the ocean, but mostly the mountains which are unique,” said Larry Benge, co-chair of the Coalition of Vancouver Neighbourhoods.
“That is Vancouver. I was at Kits Beach with a friend and we said, ‘Isn’t this amazing?’ and it is because of the physical beauty. We would be losing something.”
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