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Bank of Canada holds interest rate at 1.75%; keeps eye on oil slump, investment

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  • OTTAWA — The Bank of Canada is leaving its interest rate unchanged and says the timing of future hikes will depend on factors such as how long the oil-price slump lasts, how well business investment picks up its pace and how much room the economy still has left to grow.

    The central bank’s move Wednesday maintains its trend-setting rate at 1.75 per cent. The decision follows the quarter-point increase at the bank’s previous policy meeting in October.

    Thanks to the strengthened economy, the bank has been on a gradual rate-hiking path for more than a year and has already raised the benchmark five times since the summer of 2017.

    The central bank raises the interest rate to prevent inflation from climbing too high. Heading into Wednesday’s announcement, many market watchers had expected governor Stephen Poloz to wait until at least January before his next rate increase.

    More hikes are on the way, but the bank said the timing of its next one will hinge on changes in global trade policies as well as how higher interest rates from past increases affect consumption and housing.

    The bank also underlined several recent economic developments that it will now take into account.

    “The persistence of the oil-price shock, the evolution of business investment and the bank’s assessment of the economy’s capacity will also factor importantly into our decisions about the future stance of monetary policy,” the bank said Wednesday in a statement.

    On oil, the central bank blamed the steep slide in prices on the combination of geopolitical developments, uncertainty about the outlook for global growth and the expansion of American shale oil production. The price of western Canadian oil, the bank added, has fallen further than other benchmarks because of transportation constraints that have led to production cuts.

    “Activity in Canada’s energy sector will likely be materially weaker than expected,” the statement said.

    Recent data, the bank noted, also show the economy has less momentum heading into the final quarter of 2018. It says it’s related to factors such as a drop in business investment that it largely connects to significant uncertainty around trade last summer.

    The bank expects corporate investment to improve — outside the energy sector — following last week’s signing of the updated North American trade agreement, new federal tax incentives and ongoing pressure from rising demand.

    It will also be watching for positive developments such as more signs the economy can still expand without stoking inflation. The bank pointed to recent downward revisions to gross domestic product data that suggested there’s still some space for non-inflationary growth.

    The bank, which tries to keep inflation within its target band of one to three per cent, noted that October’s inflation reading of 2.4 per cent was above its ideal two per cent bull’s-eye. However, due to weaker gasoline prices, it is now predicting inflation to move down in the coming months by more than its previous forecast.

    The Bank of Canada has estimated it will no longer need to increase the interest rate once it reaches a level of between 2.5 and 3.5 per cent, but Poloz has said this destination range remains “sufficiently uncertain” and could move up or down.

    Andy Blatchford, The Canadian Press






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    Liberals give BlackBerry $40M to support futuristic car development

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  • OTTAWA — BlackBerry is getting $40 million in federal funding to help develop technologies that make cars safer, more connected to cyberspace and, eventually, capable of driving themselves.

    The company is putting $310 million of its own money into the initiative, expected to create 800 jobs over the next decade at BlackBerry’s campus in the Ottawa suburb of Kanata, as well as support 300 existing jobs there.

    The one-time smartphone leader is now working on advanced systems for vehicles and will put the federal money toward software development for the next generation of autonomous vehicles as well as skills training for workers.

    BlackBerry says its QNX software is already in 120 million cars, guiding systems related to driver assistance features (such as automatic braking to avoid collisions), hands-free commands, and entertainment.

    BlackBerry QNX plans to develop new automated-control systems, upgrade and secure communications in vehicles, and improve car safety by expanding its driver-assistance system.

    The company says these are milestones along the road to truly driverless cars, which are still years away from becoming widely available to consumers.

    The federal money is coming from the government’s Strategic Innovation Fund, a program intended to stimulate development of innovative products.

    Prime Minister Justin Trudeau told a news conference Friday the federal money for BlackBerry QNX software is a sign the government supports Canadian technology companies that want to lead in a new economy.

    “Think of this new platform as the central nervous system of your car. It will consolidate things like lane assistance and blind-spot detection, so that the cars of the future are safer and more reliable,” he said.

    “For a global leader like QNX, this represents an unprecedented opportunity for growth. Of course, the competition is fierce.”

    According to the government, Canada’s expertise in emerging technologies is attracting significant investments in autonomous and connected-vehicle research from global firms such as General Motors and Ford and tech players like Uber, Google and Nvidia.

    The QNX technology being developed for cars also has applications for medicine, the military, drones, industrial automation, nuclear power plants and high-speed rail, said senior BlackBerry executive John Wall.

    More immediately, the developments will make cars safer, he said.

    “I think in 2025 your car’s not going to be very different than it is today, except it’ll have more safety features, and that will trickle down to even the less-expensive vehicles,” Wall said. “What I would like to see out of all of this is less accidents and less fatalities related to cars.”

    While BlackBerry is working toward fully self-driving cars, they are not expected to be commercially available in a big way before 2035 or 2040, he said.

    The pace of technological development aside, consumers also have to be psychologically ready for the advent of autonomous vehicles, something that might take time.  

    In addition, there are myriad regulatory issues to be worked out in jurisdictions around the world to ensure the new applications have government approval and meet common standards, Wall said.

    “The technology may be moving faster than the regulatory bodies are moving.”

    — Follow @JimBronskill on Twitter

    Jim Bronskill , The Canadian Press


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    Trudeau to face more questions on SNC-Lavalin controversy dogging his government

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  • OTTAWA — Prime Minister Justin Trudeau is expected to face a fresh round of questions on the SNC-Lavalin controversy today when he hands out some money to a technology firm.

    Trudeau will be in the Ottawa suburb of Kanata to announce $40 million of federal money for BlackBerry, the one-time smartphone leader that is now working on software to enable self-driving cars.

    BlackBerry says its QNX software is already in tens of millions of cars, guiding systems related to driver assistance, hands-free features and entertainment consoles.

    A government official says the federal money, to come from the Strategic Innovation Fund, will go towards software development and skills training for workers.

    The company is putting $300 million of its own money into the initiative, expected to create 800 jobs over the next decade at BlackBerry’s Kanata campus as well as support 300 existing jobs there.

    But the federal announcement could well be overshadowed by ongoing fallout over allegations of undue political pressure on criminal justice.

    Jody Wilson-Raybould resigned from the federal cabinet this week, leaving unanswered questions about whether Trudeau’s aides leaned on her to help engineering firm SNC-Lavalin avoid criminal prosecution.

    Trudeau has denied Wilson-Raybould was pressured to instruct the director of public prosecutions to negotiate a remediation agreement with SNC-Lavalin rather than pursue a criminal trial on charges of bribery and fraud linked to the company’s efforts to secure business in Libya.

    He says Wilson-Raybould should have come to him with any concerns she might have had about the matter.

    The Liberal-dominated House of Commons justice committee has agreed to hear from a handful of witnesses, but the list does not include Wilson-Raybould.

    Federal ethics commissioner Mario Dion has begun his own investigation into the matter, specifically whether there’s been a violation of the Conflict of Interest Act.

    The Canadian Press


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