How to Thrive in the US Business Environment

It is not clear which viewpoint is correct. The Bank acknowledges that "a considerable amount of uncertainty surrounds [its] forecast."Regardless, the Bank of Canada chose the least risky alternative. I will explain.The Good New First, good news.Consumer prices are 3.4% higher than a year earlier, according to the most available May 2023 data. This inflation rate is far lower than the peak of 8.1 percent last June. Furthermore, the rate of price change for the majority of products tracked by Statistics Canada has decreased.The primary driver of this progress is energy. It was the primary reason for price increases and is now the primary cause of price decreases. At least for one crucial component, inflationary pressures were only temporary.There are also indications of improvement elsewhere.Groceries are currently the most significant contributor to Canada's high inflation. Increases for certain things have thankfully began to slow, and this trend should continue as production costs have decreased. Goods inflation is also rising, particularly when consumer demand for certain consumer durables, such as furniture, big appliances, and certain cars, appears to be declining

Shelter expenses remain high, but they may not 

be a major cause of concern for the central bank. The most significant element here is rising mortgage interest rates, which are due to bank rate rises rather than market conditions. In May, mortgage payments for homeowners accounted for nearly a full percentage point. And, among homeowners without a mortgage, I estimate an average personal inflation rate of 2.6 percent, which is 0.8 percentage points lower than the typical Canadian. This is significant because, if the Bank's policy rates do not rise further, neither will mortgage rates. We have control over which way they go.It's all excellent news. Most significant items are moving in the right direction. In June, Canada's headline inflation rate will almost probably be less than 3 percent, and we may be close to meeting our 2 percent target.This is one perspective. And one that says we've hiked interest rates too much. However, another way of looking at the data indicates a considerably more tough road ahead.The Bad News When making decisions, the Bank takes into account more than just the total rate of inflation.Instead, it uses a variety of methods to measure "core" inflation that exclude volatile components. This is not to say that food and energy aren't important. Of course, they are. However, this method of monitoring inflation tends to provide a more accurate picture of where total inflation is headed. As a result, it serves as a stronger guide for current monetary policy decisions.

Unfortunately, these metrics remain too high and have ceased improving.

"The stubbornness of core inflation in Canada suggests that inflation may be more persistent than originally thought," the Bank wrote in its quarterly examination of the Canadian economy.Inflation in the service sector (excluding shelter) is especially concerning. Restaurant prices jumped by roughly 7% last year. Travel services increased by roughly 12 percent. Consumers' large post-pandemic pent-up demand for such services may complicate the Bank of Canada's task. These are typically things that are susceptible to interest rate swings, but today's consumers are purchasing more, not less, of these services.These numbers indicate that the journey back to 2 percent inflation may be more difficult than the decline we've seen thus far, and additional rate rises may be required.Choosing the least risky option.So, which story is the correct one?No one really knows. Both positive and bad news items provide valuable perspectives. And Canada's central bank faces a difficult task. Its judgments have a gradual and ambiguous impact on the economy.But if hiking rates yesterday was a mistake, it's a simpler one to fix. The alternative error, failing to raise interest rates when necessary, is worse. The longer inflation is beyond our 2-percent target, the more entrenched expectations get and the more difficult it is to combat.

This could be what the Bank of Canada is thinking

especially given that, in retrospect, we were probably too slow to hike interest rates two years ago. It does not want to make the same mistake again.The Canadian Ombudsperson for Responsible Enterprise announced today that it will investigate allegations that two Canadian companies, Nike Canada Corp. and Dynasty Gold Corp., benefited from the use of Uyghur forced labour in their supply networks and operations in China. This is the first time that the office has conducted such an investigation.To help readers comprehend the inquiry, The Hub is thrilled to publish an exclusive Q&A with prominent expert Sarah Teich in Fall 2022. She is a Canadian lawyer and senior scholar at the Macdonald-Laurier Institute, where she focuses on international law, national security, terrorism, and human rights.In 2022, she wrote a paper titled Justice for Uyghurs: Assessing Legal Frameworks and Options for Action, which was released by MLI, the Canadian Security Research Group, and the Uyghur Rights Advocacy Project. The paper, among other things, outlines legal possibilities for the international community to hold the Chinese Communist Party accountable for what Teich refers to as "crimes and abuses against the Uyghurs in Xinjiang."