CHHMA - EYE ON OUR INDUSTRY
Volume 16, Issue 35, September 14, 2016
Inside This Issue:
• Still Time to Register for the Industry Memorial Golf Classic on September 27th
• Get the Inside Story on TIMBER MART’s Latest Changes at CHHMA Breakfast - October 26 in Montreal
• Save the Date: Seminar on the Secrets of Power Negotiating® and Developing Persuasive Proposals – November 23
• W. Galen Weston Steps Down as Executive Chairman of George Weston Ltd, Hands Helm to his Son
• Lowe’s Appoints New SVP, Business Development
• Hudson’s Bay Learns from ‘Practical’ Europeans
• In Memoriam: Michael Caplan, Task Tools’ Founder
• Toronto Sees Spike in House Sales as Vancouver Market Cools
• Hiring Bounces Back in August, Canadian Economy Adds 26,000 New Jobs
• Canada’s Economy Could Take 15 Years to ‘Reinvent’ Itself, Warns Head of RBC
• New House Prices in Canada Rise 0.4% in July on Toronto Strength
• Canadian Housing Starts Fell More than Expected in August
• Fed Rate Hike Looks Unlikely after Governor's Warning
Association News
Still Time to Register for the Industry Memorial Golf Classic on September 27th
The 15th Annual Industry Memorial Golf Classic is taking place on Tuesday, September 27th at the Blue Springs Golf Club in Acton, Ontario.
The event is held on behalf of the hardware and housewares industry and it honours stalwarts from the industry who have passed away. CHHMA members and non-members are welcome to attend.
This year’s honourees are: David Holden (Hamilton Beach), Leonard Lee (Lee Valley Tools) and Warren Parr (D.H. Howden/TSC Stores).
Past honourees include: David Fry, Ted Kennedy, Geoff Somers, Ray Ceolin, Tom Ross, Bruce Webster, Chris Hrushowy, Mike Pullen, Jim Ypma, Bill Caldwell, Brayl Copp, Ed Hardison, Stuart North, Joseph Kuchar, Shelly Lush, Jack Pountney, Christof Vanooteghem, Ian Hay, Trygve Husebye, Bernie Carpenter, Don McDonald, Les Groves, Bob Hilton, Doug Straus, Mel Boshart, George Giles and Ed Barnes.
The day allows family, friends and colleagues to honour these gentlemen while enjoying a fun day out on the golf course followed by a dinner and silent auction.
The event will start off with registration and breakfast at 8:00 a.m. with a 9:00 a.m. tee off. Dinner will commence at around 2:30 p.m.
For full details and to register online, click here.
Click here for a PDF registration form.
Money raised from the event will go towards the CHHMA Scholarship Program which provides support for children of CHHMA member company employees to attend university or college. So please consider sponsoring a hole and/or donating an item for the silent auction for this worthwhile cause.
Click here for a PDF silent auction pledge form.
Get the Inside Story on TIMBER MART’s Latest Changes at CHHMA Breakfast – October 26 in Montreal
The CHHMA is pleased to be presenting Mr. Bernie Owens, President of TIMBER MART, at a CHHMA Breakfast Seminar on the morning of October 26 at the Hôtel Holiday Inn Montréal-Longueuil.
Mr. Owens began his career in the building-supply industry over thirty years ago, serving a long tenure at building-material manufacturer, CertainTeed – a subsidiary of multinational corporation, Saint-Gobain.Throughout his 21 years at CertainTeed, Mr. Owens served various roles including, General Manager - Finish Products for North America and Vice President of Sales for the company’s gypsum and insulation business units. Over the years, Owens adopted global best practices and fostered relationships with buying groups and building-material suppliers nationwide. Owens also went on to further his studies in business at international business school, INSEAD and York University’s Schulich School of Business.
Today, as the president of TIMBER MART, Mr. Owens leads the organization with a global industry perspective, fresh ideas, clear vision, and a relentless drive to make TIMBER MART the buying group of choice for Canadian independent building material and hardware entrepreneurs.
We look forward to hearing from Mr. Owens and his inside look into how he’s led TIMBER MART through some of their biggest organizational changes over the last three years. He'll explain how he’s leveraged change for TIMBER MART to become a best-in-class organization today – and supports Canadian independent entrepreneurs with a buying group that is better, faster and lower cost than ever before.
After the presentation, there will be a Question and Answer Period. Mr. Owens will also be accompanied by members of his management team.
Click here for all the details and to register.
Save the Date: Seminar on the Secrets of Power Negotiating® and Developing Persuasive Proposals – November 23, 2016
Attention: CHHMA Members
Interested in improving business results and profitability? Can you and members of your organization develop persuasive proposals and negotiate effectively? Are you sure?
Effective proposal development and negotiating skills are essential for everyone.
Save the Date: November 23, 2016
The CHHMA has organized a special tailored one-day seminar for association members featuring negotiating expert Michael E. Sloopka.
When: November 23, 2016 – 8:30 a.m. to 4:30 p.m.(Continental Breakfast at 8:00 a.m. and Lunch at 12 noon)
Where: Corporate Event Centre at the Centre for Health & Safety Innovation (CHSI), 5110 Creekbank Road, Mississauga, Ontario
Who Should Attend: Senior management, sales management, all levels of sales and marketing personnel, and relevant cross-functional staff
Investment Required: $399.00, plus $29.95 for course materials (HST not included)
What You Will Learn: The morning session will focus on teaching attendees topline negotiating strategies, tactics, techniques, and powerful tips. The afternoon session will focus on teaching attendees a proven formula for developing more persuasive proposals that also impact your company’s line item and business reviews, as well as its new product launches.
Don’t miss out on the benefits and return on investment from attending this cost-effective one-day seminar that will help improve your business results and outcomes. Spread the word to members of your organization who can also benefit from improving their negotiating and proposal development skills.
Additional details will be provided within the coming weeks.
Industry News
W. Galen Weston Steps Down as Executive Chairman of George Weston Ltd, Hands Helm to his Son
W. Galen Weston is stepping down as executive chairman of George Weston Ltd., the country’s largest food processing and distribution company, and will be succeeded by his son.
The elder Weston will become chairman emeritus of the company, while his 43-year-old son Galen G. Weston, becomes chairman.
The younger Weston will retain his responsibilities as executive chairman and president of Loblaw Companies Ltd., Canada’s largest grocer.
The 75-year-old W. Galen Weston took executive control of George Weston Ltd. in 1974, when he succeeded his own father.
He says now is a good time to “create space” for the next generation, as his father had done before him.
Source: The Canadian Press
Lowe’s Appoints New SVP, Business Development
Lowe’s announced on Monday that James K. Han has joined the retailer as senior vice president of business development. He will report to Chief Development Officer Richard D. Maltsbarger.
In this new role, Han is responsible for accelerating the company’s business development strategy focused on identifying and implementing growth opportunities through new and emerging businesses, exponential innovation and corporate ventures.
“James brings a breadth of experience to Lowe’s with demonstrated success critical to our growth and development strategy,” said Maltsbarger in a press release. “He is an innovative, purpose-driven leader, well-practiced in leveraging development methods that bring commercially successful advances to large industry-leading companies. We are confident that James’ dynamic leadership approach will help propel our efforts to enhance and revolutionize the customer experience while growing our business.”
With more than 20 years of experience, Han has provided leadership in the areas of product management, business development, marketing, strategy and operations, driving large scale transformation in growing both core and emerging “disruptive” businesses.
He joins Lowe’s most recently from Tyco International where he served as vice president of global marketing, product management and business development for the company’s retail solutions business. In this role, he successfully designed, implemented and executed new solutions to position the business for sustainable growth, resulting in major innovation awards from leading industry analysts, media and associations.
Han has also held leadership positions at Federal Signal Corporation, Rockwell Automation, FMC Corporation and Pitney Bowes. He has served as a member of the Advisory Board for Singularity University to apply exponential technologies that address humanity’s grand challenges.
Han earned a bachelor’s degree in electrical engineering from Tufts University and an MBA from the University of Pennsylvania’s Wharton School of Business.
Source: Lowe’s Companies, Inc.
Hudson’s Bay Learns from ‘Practical’ Europeans
More than a year after the Hudson's Bay Company entered Europe with its blockbuster purchase of Galeria Kaufhof, the largest department store chain in Germany and Belgium, the iconic retailer admits it's still learning the subtle cultural differences between shoppers on both continents.
“There is a lot for us to learn and there are a lot of nuances that are different,” Richard Baker, HBC's governor and executive chairman, said in an interview last week with the Canadian Press.
Some of these differences include the types of shoes, handbags and cosmetics Europeans prefer compared to Canadians and Americans.
“There is a more of a proclivity for women to wear high heels, spiky heels, in North America than there is in Europe,” said chief executive Jerry Storch.
“When you ask people why, well, Germans just have more practical sense, for example. Or that there are a lot of cobblestone streets so they don't like the spiky heels quite as much. Not that there shouldn't be some spiky heels in the assortment ... but not as much as we might have in downtown Toronto, for example.”
The retailer bought Galeria for $3.9 billion last year in its first foray outside of North America. The purchase resulted in HBC taking over 135 retail locations, various logistics centres, warehouses and other properties, as well as the Galeria Kaufhof head office in Cologne, Germany.
Since then, it has unveiled a blueprint for a massive expansion plan in Europe to open up to 20 banner Hudson's Bay and Saks Off 5th stores in the Netherlands. Currently, it has signed long-term leases for 11 of these locations.
Storch said the company has brought over changes from Canada and the U.S. — such as tweaking the staffing at the beauty counters and offering more promotions — to its German operations, which have also been met with success.
“Everything we tried has worked. I mean that in humbleness,” he said during an analyst call prior to the interview.
“When we bought Kaufhof, we said we're not going to come over like the North Americans know better.”
Hudson's Bay reported last week that it had a net loss of $142 million in its second-quarter 2016 financial results compared to net earnings of $59 million for the same period last year.
The company said much of the loss can be attributed to increased costs related to its joint venture deals with RioCan Real Estate Investment Trust and Simon Property Group.
But on the retail side, the Toronto-based company, which also owns luxury retailers Lord & Taylor and Saks Fifth Avenue, saw consolidated retail sales rise by 60% to $3.25 billion for the quarter ending July 30, primarily due to the addition of HBC Europe and online shopping business Gilt.
Baker said the company isn't actively pursuing any more acquisitions abroad — for now.
“Frankly, we have plenty to do. There is tremendous growth and tremendous opportunity in what we already own and if we never purchased another company, ever, there is a long runway of growth in improving what we have,” he told analysts during the call.
“Having said that, if an opportunity makes itself available to us ... then it's certainly something we would consider.”
Source: Article by The Canadian Press
In Memoriam: Michael Caplan, Task Tools’ Founder
Michael Caplan, the founder of Task Tools, passed away on September 6th, 2016 in his 84th year. He is survived by his wife Bearl; son Craig; daughter Hilary and four grandchildren.
Mr. Caplan was born in Hull, England on September 20, 1931. In 1955, he immigrated to Canada and worked for 3 years on the Distant Early Warning radar system that was being built across the country. He was a dispatcher, radio operator, and commercially licensed pilot, based in Yellowknife and Cambridge Bay, North West Territories.
In 1962, Michael married his wife, Bearl, and they moved back to England so Michael could take a senior management position he’d been offered. Son Craig and daughter Hilary were born in England (1963, 1967). After 5 years Michael and Bearl longed to be back in Canada so with two children in tow they headed back.
In 1968, Michael bought a small company from his wife’s father who wanted to retire. That company was known as East West Distributors and with one product (the Uni-Disc™ multipurpose sanding disc), the family station wagon, and a strong desire to succeed, Michael set out on a mission to grow his company across the country. From these humble beginnings, Task Tools, a true Canadian success story, was born.
As the company grew, Michael brought his son, Craig (now Chairman & CEO), and son-in-law Scott Doré (now President), into the business.
In 2007, at the age of 76 while still working fulltime, Mr. Caplan was inducted into the Hardware & Housewares Industry Hall of Fame.
Michael retired as Chairman of Task Tools in 2008.
Task Tools offers three brands – Task Signature®, Task® and Tuf-E-Nuf® – which sell in six categories: power tool accessories, hand tools, abrasives, worksite accessories, cargo accessories, and innovative electrical accessories.
For more information, go to www.task-tools.com.
Economic News
Toronto Sees Spike in House Sales as Vancouver Market Cools
Toronto is experiencing a spike in sales of single-family homes fetching at least $1-million while the Vancouver market slows down, a trend that is forecast to carry over into the fall.
“Vancouver has an incredible amount of wealth, but Toronto is a place where there are more higher-paying jobs,” said Brad Henderson, chief executive officer at Sotheby’s International Realty Canada.
The Vancouver market appears to be finally going through sticker shock after a three-year rally. The average price of detached properties sold within Vancouver’s city limits fell to $2.6-million in August, down 11.6% from July, while the average price within Toronto proper rose 0.3% to $1.21-million, according to data from real estate boards.
Sotheby’s did its own analysis and found there were 959 single-family properties that sold for $1-million or higher in July and August in Toronto, up 55.2% from the same period last year. By contrast, sales in that million-dollar category tumbled 44.3% over the past year to 288 houses that traded hands in Vancouver.
The B.C. government introduced a 15% tax on purchases by foreign buyers in the Vancouver region, effective Aug. 2.
Sales were slowing down in July in Vancouver before the tax took effect, Mr. Henderson said. “It remains to be seen whether demand in Vancouver will go away or if that demand will be realized. The new tax caught the market for the most part by surprise. It stunned the market,” he said.
Some industry observers don’t expect much of a spillover of foreign buyers, notably from China, into Toronto. But Mr. Henderson said he anticipates some money from abroad that would have gone into Vancouver is bound to land in Toronto.
“Investment by non-Canadians is just going to add to the dynamics already in play in Toronto. It’s going to add to an already strong market,” he said, citing low interest rates, limited supply and solid demand generally as key factors already driving the housing market in Canada’s largest city.
Data released by the B.C. government show foreign buyers accounted for 10% of sales of all housing types in Metro Vancouver during a five-week period from June 10 to July 14.
Toronto and Vancouver remain by far the country’s two most expensive places to buy houses.
Mr. Henderson said that while average prices fell in Vancouver from July to August, they remain well above levels from a year earlier. He predicts benchmark prices will climb next year in Toronto while price growth flattens in Vancouver. The benchmark price is a representation of the typical property sold in an area.
In Greater Vancouver, which includes suburbs such as Burnaby and Richmond, the price for detached houses, condos and townhouses sold in August averaged $833,065, down 7.5% from the same month in 2015.
The B.C. government implemented a measure in mid-February that saw buyers of properties pay extra tax on the portion of their purchase above $2-million. That tax on higher-end houses and the new tax on foreign buyers have combined to slow down the top-end market in Vancouver, said Cameron Muir, chief economist at the B.C. Real Estate Association.
Sotheby’s didn’t examine Greater Vancouver, but its data show boom times in the Greater Toronto Area. There were 3,026 sales of single-family houses in the GTA in July and August, up 82.6% from the same two months in 2015.
In the GTA’s luxury segment, there were 47 sales of single-family properties for $4-million or higher in July and August, a 74.1% increase from a year earlier. In the City of Vancouver in that luxury category, sales decreased 37.9% over the past year to 41 properties that changed hands.
Source: Brent Jang, The Globe and Mail
Hiring Bounces Back in August, Canadian Economy Adds 26,000 New Jobs
The Canadian job market rebounded in August, gaining back much of the ground lost in July.
Statistics Canada reported last Friday that the economy created 26,200 net new jobs in the month compared with a loss of 31,200 in the previous month.
However, even with the increase in the number of jobs, the unemployment rate crept up to 7.0% compared with 6.9% in July as more people entered the labour force and started looking for work.
Economists had expected a gain a 15,000 jobs and the unemployment rate to hold steady at 6.9%, according to Thomson Reuters.
The jobs numbers have been volatile in recent months.
The overall increase in the number of jobs in August was due to a gain of 52,200 full-time jobs, nearly offsetting a loss of 71,400 full-time positions in July. The number of part-time jobs in August fell by 26,000 compared with a gain of 40,200 the previous month.
The number of jobs rose in Quebec by 22,000 in August as its unemployment rate edged up to 7.1% from 7.0%, while Newfoundland and Labrador gained 4,000 jobs in the month as its unemployment rate moved down to 12.3% from 12.8%. New Brunswick lost 3,000 jobs, with its unemployment rate dropping to 9.4% from 9.7%.
Statistics Canada said there was little change in the other provinces, but noted that Ontario saw an increase in its unemployment rate to 6.7% from 6.4% in July as more people sought work.
The number of public sector employees jumped 57,000 in August, while the number of private sector jobs increased 8,300. The number of self-employed workers slipped by 39,100.
By industry, the resources sector — including oil and gas extraction — added 4,400 positions in August. Manufacturing gained 7,400 jobs and manufacturing added 2,900.
The largest gain was in public administration, which expanded by 16,300 positions.
“It was encouraging to see a modest rebound in hiring,” said Brian DePratto, economist with TD Bank.
But despite the positive jobs report, Mr. DePratto said the country’s labour market remained “consistent with the economic lethargy that has characterized the first half of this year.”
Over the past 12 months, employment is up 77,000 positions (+0.4%), with all of the gains in part-time work. Over the same period, the total number of hours worked has fallen slightly (-0.4%).
Source: Statistics Canada, The Canadian Press, The Financial Post
Canada’s Economy Could Take 15 Years to ‘Reinvent’ Itself, Warns Head of RBC
Canada’s economy could take 15 years to reinvent itself after manufacturing and service industries began to shrink in the wake of the financial crisis, Royal Bank of Canada CEO David McKay said last week.
Canada has seen a “fundamental restructuring”‘ of its export economy since losing more than 7,000 exporting companies to the U.S. when the country’s currency traded at par with the U.S. dollar following the financial crisis of 2008 and 2009, McKay, 52, said in a television interview on Bloomberg TV Canada. Heavy manufacturing and service industries were lost, and haven’t come back, he said.
“So the economy has had to reinvent itself: create new customers and new markets with new products and new manufacturing capability,” McKay said. “That takes time. That can take a decade, that can take 15 years.”
McKay’s comments come after the Bank of Canada said last Wednesday risks to the country’s inflation profile had “tilted somewhat to the downside” in the eight weeks since the central bank’s last set of forecasts. That was a departure from previous statements that described inflation risks as “roughly balanced,” and counters the bank’s long-held view that exports would lead the country out of its malaise.
McKay said Canadian companies are still being conservative, avoiding borrowing until they gain more confidence on the economy.
“We’re not seeing utilization of revolving credit lines, which means customers are building inventory, building receivables,” McKay said. “It feels like we’re still in a risk-off mentality with small business and commercial customers, in that they’re waiting for a more confident, clear picture of the economy.”
Canada’s economy contracted 1.6% in the second quarter, the most since 2009 as Alberta wildfires curbed oil production, and weak global demand and lower commodity prices prompted businesses to cut spending.
“All this volatility and economic numbers, all of this debate about whether we’re on solid footing, causes people to hold back,” McKay said. “It’s very much a confidence-driven issue.”
McKay also said he’s concerned about how much current levels of consumer debt and higher debt-servicing costs will hurt longer-term economic growth.
“When we put so much of our consumer debt into the housing market and rates go up, more disposable income gets consumed within that consumer wallet and therefore it stunts longer-term growth,” McKay said. “That’s one of the unintended outcomes of moving so much of that borrowing forward, and putting it into housing stock the way it is. So we certainly have to be concerned about longer-term growth from that perspective.
McKay said housing policy changes in Vancouver are “unprecedented territory’ though it could stave off unaffordability issues that hit California.
“If you look at what happened in southern California, where doctors, nurses, teachers, firefighters, policemen couldn’t afford to live in a community and had to commute from long distances, you lose your support network, you lose your economy around those houses,” McKay said. “I think they’re trying to solve that, and they have every right to solve for that kind of community challenge.”
Source: Article by Doug Alexander, Bloomberg News
New House Prices in Canada Rise 0.4% in July on Toronto Strength
Canadian new housing prices rose more than expected in July, climbing 0.4% from June on continued strength in the hot market of Toronto, Statistics Canada data reported last Thursday.
The monthly increase in the New Housing Price Index (NHPI), the 16th in a row, was greater than the 0.2% advance forecast by analysts in a Reuters poll.
Prices in the combined Toronto-Oshawa region, which accounts for 27.92% of the Canadian market, rose by 1.0%. Builders cited market conditions and prices on new listings as reasons for the increase.
Prices in Vancouver, another booming market, climbed 0.6%. The rapid rise in prices in the two major cities have raised concerns that their markets are becoming overheated.
Other significant price increases occurred in Victoria (+0.8%), Hamilton (+0.7%) and Vancouver (+0.6%). Builders cited market conditions as the main reason for the price gains in all three markets. This was the largest price movement observed in Hamilton since August 2015.
New housing prices rose 0.2% in Quebec, following seven consecutive months of no change.
Prices were unchanged in 5 of the 21 metropolitan areas surveyed.
Lower negotiated selling prices accounted for the price declines observed in St. John's (-0.3%) and Windsor (-0.2%). New house prices in Saskatoon declined 0.2% for a second month in a row, reflecting market conditions.
New Housing Price Index, 12-month change
The NHPI rose 2.8% over the 12-month period ending in July, the largest increase at the national level since August 2010.
The combined metropolitan region of Toronto and Oshawa (+7.0%) was the top contributor to the gain, recording the largest year-over-year price increase in July. This marked the largest 12-month rise for the region since June 2004.
Other notable increases were observed in Vancouver (+5.5%), St. Catharines–Niagara (+5.1%) and Victoria (+3.6%). This was the largest year-over-year gain in Victoria since July 2006, and the largest rise in St. Catharines–Niagara since July 2008.
Among the 21 metropolitan areas surveyed, 7 recorded year-over-year price declines in July. Saskatoon (-3.2%) and Calgary (-0.6%) posted the largest 12-month decreases for the third consecutive month.
Source: Statistics Canada, Reuters
Canadian Housing Starts Fell More than Expected in August
Canadian housing starts fell more than expected in August compared with July as both multiple and single-detached starts declined, data from the Canada Mortgage and Housing Corporation (CMHC) showed last Thursday.
The seasonally adjusted annualized rate (SAAR) of housing starts fell 6.1% to 182,703 units in August from a revised 194,663 in July. Economists had expected starts to fall to a 190,000-unit pace in August.
The decline in starts to a still healthy level left them more in line with what the trend in building permits data has suggested, Avery Shenfeld, chief economist at CIBC Capital Markets, said in a research note.
The six-month moving average dropped 2.8% to 195,640 units in August compared to 201,379 in July.
"Housing starts declined in August, as construction of multi-unit dwellings slowed in most regions, led by lower activity in Alberta and Manitoba” said Bob Dugan, CMHC chief economist. "However, housing market activity levels remain elevated and this decline in starts is the market's response to increasing levels of supply. Multi-unit inventories are above average in several major markets across the country."
Starts of multiple urban buildings such as condominiums fell 7.3% to 111,378 units, while single-detached urban starts dropped 3.7% to 56,501 units.
Hot housing markets in Canada's two largest cities, Toronto and Vancouver have sparked some fears of a housing bubble, even as other markets cool amid a slump in commodity prices that has weighed on the country's economic growth.
However, recent data has shown a slowdown in home sales in Vancouver. A new tax on foreign buyers was recently introduced in the city.
"An easing in housing starts in 2017/18 vs the annual average of 2016 will mean Canada needs an alternative source of growth," said Shenfeld.
In August, the seasonally adjusted annual rate of urban starts decreased in the Prairies, British Columbia, Ontario, and in Atlantic Canada, but increased in Quebec.
Rural starts were estimated at a seasonally adjusted annual rate of 14,824 units in August, down 6.4% from 15,840 in July.
Source: CHMC, Reuters
Fed Rate Hike Looks Unlikely after Governor's Warning
The Federal Reserve should avoid removing support for the U.S. economy too quickly, Fed Governor Lael Brainard said on Monday in comments that solidified the view the central bank would leave interest rates unchanged next week.
Brainard said she wanted to see a stronger trend in U.S. consumer spending and evidence of rising inflation before the Fed raises rates, and that the United States still looked vulnerable to economic weakness abroad.
“Today’s new normal counsels prudence in the removal of policy accommodation,” Brainard, one of six permanent voters on the Fed’s rate-setting committee, told the Chicago Council on Global Affairs.
She said the U.S. labour market was not yet at full strength, which means “the case to tighten policy preemptively is less compelling.”
Brainard did not comment on the specific timing of future rate policy changes but she held firm in arguing for caution in what could be the last word from a Fed policymaker before the central bank’s Sept. 20-21 meeting.
Policymakers will go into the meeting divided, with some concerned current low rates will fuel a surge in inflation while another camp, which includes Brainard, has argued that the Fed should not rush to raise rates.
Many other policymakers think the U.S. job market is near full strength and Fed Chair Janet Yellen argued in July the case for rate increases has strengthened.
“I think circumstances call for a lively discussion next week,” said Atlanta Fed President Dennis Lockhart, who will not be a voter at next week’s policy review but will participate in discussions.
Brainard said on Monday the labour market might still tighten further without putting pressure on inflation.
“The response of inflation to unexpected strength in demand will likely be modest and gradual, requiring a correspondingly moderate policy response,” she said.
U.S. stock prices rose following Brainard’s comments while the dollar weakened and yields on U.S. government debt fell. Traders trimmed their odds for a September rate hike to 15% from 24% on Friday, according to CME Group. Investors still saw just higher than 50/50 odds for a December hike.
The central bank last raised borrowing costs in December, ending seven years of near-zero rates. Policymakers signalled in June they could still hike rates twice in what remained of 2016.
Over the last year, Brainard has been one of the Fed’s most vocal defenders of low interest rate policy, arguing the United States is vulnerable to economic troubles in Asia and Europe.
She said on Monday the low interest rate policies across advanced economies could make the United States more vulnerable to spikes in the value of the dollar which could put downward pressure on inflation.
Republican Presidential candidate Donald Trump accused the Fed on Monday of keeping interest rates low because of political pressure from the Obama administration.
Minneapolis Fed President Neel Kashkari said “politics does not play a part” in the Fed’s deliberations and that current low U.S. inflation means there is no “huge urgency” to hike.
Inflation has been below the Fed’s 2% inflation target for the last four years.
Viewed as an influential voice of caution within the Fed’s Washington-based board of governors, Brainard was the U.S. Treasury’s undersecretary for international affairs from 2010 to 2013.
Source: Reuters
Upcoming CHHMA Events
Industry Memorial Golf Classic
Tuesday, September 27, 2016
Blue Springs Golf Club, Acton, Ontario
Bernie Owens (TIMBER MART) Breakfast Seminar
Wednesday, October 26, 2016
Hôtel Holiday Inn Montréal-Longueuil, Longueuil, Québec
Secrets of Power Negotiating & Developing Persuasive Proposals One-Day Seminar
Featuring Negotiating Expert Michael E. Sloopka
Wednesday, November 23, 2016
Corporate Event Centre at CHSI, Mississauga, Ontario
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To register for all events visit our website at www.chhma.ca or call Pam Winter at (416) 282-0022 ext.21.
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"Eye On Our Industry" is published by the CHHMA as an information resource for our members. Member input regarding content and format is welcomed. Please contact Michael Jorgenson by email: mjorgenson@chhma.ca, or call at (416) 282-0022, ext. 34. CHHMA is located at 1335 Morningside Ave., Suite 101, Scarborough, ON, M1B 5M4 www.chhma.ca
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