Bank of Canada’s Macklem expects higher inflation outlook as oil prices remain elevated

[u/joe4942]

https://www.theglobeandmail.com/business/article-bank-of-canada-interest-rate-macklem-inflation-oil-prices-imf/

[u/moisturized69tatas]

They really thought in July oil would be at 75 by now, damn, that was very optimistic. If things stay the way they are then we will see current prices continue well into the future in my opinion and nothing changes in the next 12months. Boc is fucked, high inflation but economy is doing not great, I dont see how we come out ahead of this one.

[u/mayorolivia → u/moisturized69tatas]

Even though their only mandate is price stability, they’re in a tough spot because the labour market is weak. In addition, the CAD has weakened since the US fed began their hiking cycle (which risks higher inflation). Since we can no longer assume the Iran war will end anytime soon, I think the BOC will have to hike at least once before the end of this year.

[u/HarpySeagull → u/mayorolivia]

Everyone else (other nations) hiked to no effect (edit: no effect on consumer prices going bananas); there’s no ceiling to what the tech companies want to borrow so hiking interest rates only hurts literally every other kind of business.

[u/Levorotatory → u/moisturized69tatas]

Many people expected a TACO by now, which would have brought oil prices down.

[u/stoops → u/Levorotatory]

Maybe many stupid people expected that? Anyone who has been paying attention knows that Trump has started a needless endless forever war and that years worth of destruction to oil fields and facilities have already taken place meanwhile the US debt is rising higher and higher barrelling towards $50 trillion and US bond yields are now spiking over %5 while more and more companies are laying off due to tariffs and taxes while inflation and the cost-of-living is soaring through the roof while the average person is getting poorer and poorer from worsening wages and stagnation.

What do people think or expect is going to happen here in the future of things to come?

[u/Levorotatory → u/stoops]

The war is definitely needless and pointless, but there is no reason it needs to go on forever. Trump could walk away at any time. The price response to the supply disruption has also been rather muted, with oil prices only increasing by about 50%. That is likely a result of electrification cutting demand, so an end to the war would bring a price crash even if supply doesn't fully recover to pre-war levels.

[u/Commercial_Letter738 → u/Levorotatory]

He can't, because it means giving control of the strait completely to iran, and having a group that sponsors terrorism globally control that strait militarily is not something anyone wants- not to mention they back the houthis which also wish to do the same with their strait

[u/Nerevarine123]

Good for albertans at least

[u/CarRamRob → u/Nerevarine123]

And Canadians.

Contrary to what many seem to think, having a decent exposure to commodities is a good thing, as it helps hedge against price fluctuations. That would be missing if you design around a manufacturing/services industry entirely that so many “we need to divest” seem to miss

[u/samsquamchy]

Right as I need to renew my mortgage this summer. Of course!

[u/creamycolslaw → u/samsquamchy]

Never fails

[u/eggfarmer1980]

Oil is relatively low priced.

[u/kagato87]

Maybe we could ease off of this roller coaster a bit?

More local manufacturing, more renewables. Not a cold switch, just diversify. And read diversity, not just "different oil and gas products."

[u/Gunslinger7752 → u/kagato87]

Manufacturing costs are up significantly YoY. Also the only reason we still have a manufacturing sector in Canada is because of access to the us market and the scale that brings. “Local” manufacturing for local consumption would raise prices significantly.

[u/pfak → u/kagato87]

Well, not sure we can build any infrastructure given the current political environment. We'll see. Carney has changed the game a bit, but the courts still prevail, and they aren't looking out for the long term viability of the country.

[u/throwaway80818283]

Setting the stage for rate hikes.

[u/icefire252]

We knew this was happen when the middle east tantrum broke out. There was already no way for prices to stay flat or fall, god forbid, before the tantrum. Now it's full throttle inflation spike.