Economic Insights from MPC 2022

I, with 1400 of my industry colleagues, recently spent 2 days in the gorgeous city of Vancouver. We networked and enjoyed being in person again and boy did we?learn! The best of the best are?continually learning and there certainly was an abundance of knowledge to ingest. Today I want to share with you the insights I took from Benjamin Tal- the Chief Economist for CIBC. Bear with me as I attempt to convey complex concepts succinctly.?

World Events- what we need to be aware of?

1. The ongoing crisis on in the Ukraine is causing havoc – no surprise.?
2. Given the turmoil, OPEC has very strong pricing power?
3. 2021 saw consumer consumption hit a record high – 4 years' worth of goods in 1 year.?
4. COVID is here to stay as an ongoing issue- Pie variant now in play?
5. China is facing economic fallout from Covid which cannot be controlled by their usual measures.?

Canada- what's happening here???

1. Severe labor shortage especially in low paying jobs?
2. Despite - ‘People don’t want to work’ mindset – we have a normal participation level?
3. Lack of workers will cause wage inflation?
4. Long Covid has taken many out of the work force?
5. 400,000- immigrants in 2021 – 70% were students attending school here?
6. 500,000 -immigrants in 2022 – (230,000 from the Ukraine on 3-year visas)?
7. Severe rental shortages compounded by the prohibitive cost of building – may see government intervention to lower costs?
8. Covid has changed the labor market by showing the effectiveness of virtual employees?

Bank of Canada?

1. Inflation is gauged by the prices of 4 key items – Bread, Milk, Beer, and Gas?
2. If you give the BOC a choice between recession or inflation, they will choose recession every time as it is 100% about their reputation to be be able to avoid inflation?
3. Given that, they have 2 options.?
4. Raise rates until you hit target inflation?
5. Cheat and set new target (this option will not be chosen)?
6. Rates will stay high until inflation is dead – predicting one more rate increase this year.?

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Predictions on Rates?

1. Target is 2% inflation which will take some time to get to?
2. Expect BOC to eye up 4.25%?
3. Want to avoid a double dip recession so rates will be slow to move – mid 2024 earliest?

So there you have it, a look at Ben Tal and his predictions gleaned from MPC 2022!