These are stories Report on Business is following Wednesday, Dec. 3, 2014.
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What to watch for this morning
The Bank of Canada is expected today to end 2014 much as it began: Doing nothing, though there's a twist.
Governor Stephen Poloz and his central bank colleagues release their last rate decision of the year this morning.
They won't change their benchmark interest rate, now at 1 per cent. Nor are they expected to change their signal on which way the next move could be.
But markets will be watching closely for what the central bank says about the plunge in oil prices, and the potential impact of the collapse.
There's a lot at play here, everything from the effects of the weak Canadian dollar to the impact of lower prices at the gas pump, and that how that will affect consumer spending.
"Heading into its last fixed announcement date … of 2014, the Bank of Canada finds itself again straddling an uncomfortable divide between a strengthening U.S. economy and growing fears of economic stagnation elsewhere reflected in a sharp fall in the price of oil and other commodities," David Tulk of TD Securities said in a recent report.
"The renewed weakness in the Canadian dollar has acted as a shock absorber, helping to dampen the hit to the energy sector while enhancing the competitiveness of a wider range of exports," he added.
"Consumers on both sides of the border have also benefited from lower prices at the pump while an environment of low interest rates continues to underpin housing demand."
All of which points to the Bank of Canada sticking to its neutral stance, while at the same time "citing symmetric risks that have admittedly increased in magnitude."
Here's what other observers expect:
"Look for the bank to remain cautious on the economic backdrop, driven by the slide in oil prices and weak global outlook. The former is likely the bigger concern, as the lack of OPEC production cuts suggests oil prices still have meaningful downside. A weaker Canadian dollar and lower gasoline prices will provide some offset, but that takes time to evolve." Benjamin Reitzes, BMO Nesbitt Burns
"We believe that the statement will continue to highlight that the increase in core inflation is because of temporary factors rather than underlying inflationary pressures, given the slack in the economy. However, there is a risk that the BoC could acknowledge that slightly broadening in inflationary pressures. The statement should also show that the BoC is becoming more confident in the outlook, especially since non-oil exports are gradually improving thanks to robust growth in the U.S." Charles St-Arnaud, Nomura Securities
"Governor Poloz recently reiterated that labour market slack is the 'key macroeconomic determinant' of the inflation outlook. The central bank has been downplaying earlier upward inflation surprises stressing the temporary nature of some of this pressure. The December policy statement will be monitored to determine if policy makers maintain this view or acknowledge that more sustainable upward pressure may be emerging. Such a characterization would imply policy remaining on hold awaiting indications of which trend has greater sustainability." Paul Ferley, Royal Bank of Canada
"The Bank of Canada will have to shift away from its earlier emphasis on labour market slack and the output gap, particularly given two strong months of job gains. Instead, the central bank's message on Wednesday will blunt any tendency to view these gains as bringing rate hikes closer by citing the risks to growth from tumbling oil prices, particularly for business investment and national income." Nick Exarhos, CIBC World Markets
"While its arguments about 'material slack' and youth unemployment are losing traction … the central bank can still maintain its dovish stance by shrugging off the rising price pressures, reminding markets that its inflation target is flexible, and that downside risks, particularly from abroad, still pose a threat to the economy." Krishen Rangasamy, National Bank Financial
"Now that both [total and core] inflation readings are firmly above the 2-per-cent target as the mid-point of the 1- to 3-per-cent operational band, markets will be looking for further guidance from the governor. Since the latest inflation reading was for October, it doesn't capture the roughly US$10 additional decline in WTI oil prices since the end of that month up to the point of writing. I would expect the governor to continue to emphasize how their policy risks are asymmetrically skewed more toward concern out of getting inflation forecasts wrong by way of renewed downside risk rather than further upsides." Derek Holt, Bank of Nova Scotia
- Jeffrey Jones and Carrie Tait: For companies in pain, oil's fall hits harder
- Fill 'er up: Gas pump prices at 4-year low, expected to ease even more
- Oil's plunge to buoy global economy: A $1.3-trillion boost to consumers
- 'Dinged' and 'pinched': A long oil rout would sideswipe Canada
- Jeffrey Jones, Jeff Lewis and Carrie Tait: As oil skids toward $65, companies forced to recalculate
- Eric Reguly: Why oil prices will bounce back ... eventually
RBC profit jumps
Royal Bank of Canada closed out the year with an 11-per-cent pop in fourth-quarter profit.
RBC today posted a quarterly profit of $2.3-billion, or $1.59 a share, which met the estimates of analysts, The Globe and Mail's Tim Kiladze reports.
Yesterday, Bank of Montreal fell shy of what was projected.
The fourth-quarter results brought its annual profit to $9-billion, or 8 per cent better than last year.
- Tim Kiladze: RBC fourth-quarter profit climbs 11% to $2.3-billion
- Tim Kiladze: As Canadian growth slows, BMO looks to U.S. operations for profits
Britain ups forecasts
The British government is heading into next year's election with a rosier forecast.
In his Autumn Statement today, George Osborne, the Chancellor of the Exchequer, boosted its projections for economic growth this year and next, to 3 per cent and 2.4 per cent, respectively.
That's up from earlier projections of 2.7 per cent and 2.3 per cent.
But, oops, the government is going to fall shy of its deficit goal.
"Today against a difficult global backdrop I can report higher growth, falling inflation, falling unemployment and a deficit which is half what we inherited," Mr. Osborne said.
Keep on truckin'
The Insurance Bureau of Canada is having a little fun today with its annual list of the vehicles most often stolen in the country.
The headline on its news release is "What the 'F' … series?"
That's because an amazing seven of the top 10 are versions of Ford Motor Co.'s F-series pickup trucks.
As the industry association put it, this shows "a growing interest by organized criminals" in the vehicles.
There was, by the way, a 50-per-cent jump in thefts of the trucks in Alberta.
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