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Governor of the Bank of Canada Tiff Macklem walks outside the Bank of Canada building in Ottawa, Ontario.

REUTERS/Blair Gable

Know when to hold ‘em

On Wednesday, the Bank of Canada held its key rate unchanged at 5% – the third time it has done so since July. It noted that the global economy is slowing, along with inflation, but the softening numbers weren’t enough for it to lower rates. It also noted the rise in shelter inflation – rents and high mortgage costs due to elevated interest rates.
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Shawn Fain, president of the United Auto Workers (UAW) speaks as President Joe Biden joins striking UAW members on the picket line in Belleville, Mich., in September.

REUTERS/Evelyn Hockstein

Could union wage hikes worsen inflation?

It may be cold out, but bankers up north are sweating thanks to a flurry of union settlements that could, according to a new report from Toronto-Dominion Bank, have “staying power.”

For years, unionized workers’ pay failed to keep pace with inflation, but now labor negotiators are pressing to close the gap. The successful UAW strike in the United States led to 11% wage increases, and Canadian union settlements, though not as high, are rising as workers try to make up for ground lost to inflation.

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Rwandan President Paul Kagame attends the lighting ceremony of the Rwandan genocide flame of hope, known as the "Kwibuka" (Remembering), to commemorate the 1994 Genocide at the Kigali Genocide Memorial Center in Kigali, Rwanda April 7, 2023

REUTERS/Jean Bizimana

Hard Numbers: Rwanda’s Kagame will run again, the EU takes on Uber, water contamination threat in Libya, US Fed keeps cool

4: Rwanda’s President Paul Kagame, who has been in power since 2000, announced that he’ll run for a fourth term in next year’s election.

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A view of graffiti at the damaged port area in the aftermath of a massive explosion in Beirut, Lebanon


Hard Numbers: Beirut explosion anniversary, Navy sailors charged with spying for China, UK raises interest rates, Russian bombs destroy historic church, Germany defeated in World Cup

3: Friday marks three years since the horrific Beirut port explosion that killed more than 200 people, wounded thousands, and extensively damaged the Lebanese capital. The blast occurred after hundreds of tons of ammonium nitrate were improperly stored at a port warehouse despite repeated warnings of the danger. Meanwhile, efforts to hold senior government officials accountable have repeatedly been blocked by a corrupt judicial system. Sadly, Lebanon’s culture of impunity lives on.

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Chair of the Federal Reserve Jerome Powell testifies during a House Financial Services Committee hearing.


There’s no party like a rate hike party

Rate hikes will continue … until morale declines or a recession hits. That’s the message market watchers expect, despite slowing inflation, from the Bank of Canada’s next meeting on July 12. The Canadian economy has stayed hot despite the Bank’s effort to cool it with increased interest rates, including a 25-point increase in June.

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US EU and UK currencies

EU inflation vs. US inflation

Rapid inflation has been hitting the headlines and consumers' pocketbooks in the US and the EU for two years. But now it seems like the tide could be turning — in America at least.

Last week, the US Federal Reserve paused its interest rate hikes for the first time in 15 months. Meanwhile, the European Central Bank increased rates to their highest point in over 20 years, and signaled another hike to come next month.

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Traders react to Fed rate announcement on the floor of the NYSE in New York.


US economy’s slowing growth

The US economy grew by just 1.1% year-on-year in the first quarter of 2023, suggesting that the Federal Reserve’s tightening of monetary policy to stamp out inflation is indeed slowing down the biggest economy in the world.

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Turkish President Recep Tayyip Erdogan.

Annie Gugliotta/ GZERO Media

What We’re Watching: Three ways to address inflation … with varying degrees of success

Erdonomics: Growth > stability

Turkey has long had a hyperinflation problem, but that doesn’t mean that its central bank has sought to raise interest rates to bring prices down. In fact, Turkey’s President Recep Tayyip Erdogan, whose unorthodox economic approach has been dubbed Erdonomics, has even sought to lower interest rates during inflationary times. Why?

Central to his approach is the belief that economic growth trumps all, including price stability. So Turkey’s central bank has been unwilling to raise interest rates to reverse hyperinflation, and Erdogan has even called himself an “enemy” of interest rates.

As the Turkish president explains it, keeping interest rates low – and static – stimulates demand, driving economic growth.

But that hasn’t panned out. Inflation in Turkey soared to a quarter-century high of 85% in October – largely due to roaring food and fuel prices. Crucially, analysts think the official number was closer to 186%, meaning prices would have almost tripled. As a result, the average Turk has far less disposable cash to inject into the economy. What’s more, Turkey has seen its currency, the lira, plummet a whopping 90% since 2008.

What do Turks think of the cost-of-living crunch? They will get to weigh in on May 14, when the country heads to the polls. Erdogan is facing a united opposition that has been pushing the message that he has wrecked the economy.

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