MONEY IN BRIEF
Canadians should get used to higher interest rates, Poloz says
OTTAWA (CP) — Bank of Canada governor Stephen Poloz wants Canadians to get used to the idea of three per cent interest rates as the new normal, now that the era of rock-bottom borrowing costs is gradually fading away.
Poloz raised the benchmark rate last week for the fifth time in just over a year to 1.75 per cent – its highest level in about a decade.
He sent signals that future hikes could arrive sooner than previously expected, in large part due to the economy’s resilience and the removal of some business uncertainty following the recent agreement on an updated North American trade pact. Testifying before MPs on Tuesday in Ottawa, Poloz said many adults are used to the lower rates and are too young to remember the much-higher rates of the 1980s, when they climbed into the teens. Poloz says the current rate is still too stimulative for the improved economy and he’s reiterating his warning that it will rise to what the bank considers its neutral range of between 2.5 and 3.5 per cent. He says the pace of future rate increases is still unknown, but he adds the bank will carefully analyze how well the hikes are absorbed – particularly for the many households that have piled on considerable debt in the low-rate environment.
“We sought to put more emphasis on the notion that someday we’re going to be back at neutral – and that neutral is 2.5 to 3.5 per cent – so that people would begin to digest that as an approaching fact,” Poloz told the House of Commons finance committee. “It shouldn’t be a hard thing for people to service their debt at those kinds of interest rates.”
Airlines cut ties with SeaWorld
Air Canada and WestJet Airlines Ltd. are joining a growing wave of companies that have cut ties to SeaWorld, in sync with the spirit of a bill to ban whale and dolphin captivity and in the wake of concerns raised by animal rights advocates.
The Senate passed legislation last Tuesday that would make keeping and breeding cetaceans such as dolphins and whales a criminal offence.
Air Canada says its vacation wing stopped offering SeaWorld tickets for purchase on its website last week, calling the move a “commercial decision.” WestJet dropped the tickets – previously available as part of vacation packages – last August. “This was a decision our leadership team made entirely on its own and believes the decision is entirely in keeping with our caring culture,” spokeswoman Lauren Stewart said in an email.
SeaWorld, which has three marine theme parks in Florida, Texas and California under the umbrella of SeaWorld Entertainment Inc., confirmed Monday that “the business relationship has ended” with both airlines. Carriers and other companies such as JetBlue Airways Corp., Southwest Airlines Co. and Taco Bell have all jettisoned links with SeaWorld, many amid the fallout from the 2013 documentary Blackfish that focused on orca captivity. People for the Ethical Treatment of Animals (PETA) organized a recent email campaign urging Air Canada to sever promotional ties.