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(October 18, 2007) On Thursday, the Bank of Canada released its October Monetary Policy Report, which says the economy has been “stronger than projected” and is operating “further above its production potential” than previously expected.

Since July, the BoC’s outlook for the U.S. economy has worsened, due to an appreciating Canadian dollar and tight credit conditions. The Bank says that a weakening U.S. economy combined with a higher Canadian dollar will “exert a more significant drag on the economy in 2008 and 2009 than previously expected.”

As a result, the BoC predicts that Canada’s GDP will grow by 2.6% in 2007, 2.3% in 2008 and 2.5% in 2009.

Due to a more balanced economy and the strength of the Canadian dollar on consumer prices, the report says that core inflation is projected to decline to 2% in the second half of 2008, while total CPI inflation is expected to hit 3% at the end of 2007 and 2% in the second half of next year.

The BoC acknowledges that there are upsides and downsides to its inflation projections. An upside is that more demand in the Canadian economy could continue longer than expected. A downside is that the Canadian dollar may remain higher than 98 cents U.S. for reasons not related to product demand.

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IIAC wants G7 to discuss free trade in securities

(October 18, 2007) The agenda for the G7 meeting of finance ministers on Friday is likely already jam-packed, but if the Investment Industry Association of Canada could add one item to the schedule, it would be a discussion of free-trade in securities.

Along with the Securities Industry and Financial Markets Association, the IIAC issued a release calling on the G7 ministers to address “the increasingly global nature of financial markets.”

The associations say that local licensing requirements should be exempt for global firms who do cross-border transactions with institutional investors.

“Tailoring reform to eligible foreign firms that serve institutional clients would create a groundbreaking pilot program among like-minded international regulators,” says Marc Lackritz, president and CEO of SIFMA. “This essential initial step towards ‘mutual recognition’ will elevate global supervisory practices and enhance investor protection.”

Ian Russell, the president and CEO of the IIAC adds that practical reforms are needed to address the many regulatory obstacles that impede the delivery of cross-border financial services. He acknowledges that “mutual recognition” raises many complex regulatory issues, but adds that “this measured approach provides a foundation for progress toward the G7’s stated goal of free trade in securities.”

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Many boomers plan to work “until they die”

Forget retirement. Many entrepreneurial baby boomers plan to work until the day they die. That’s according to a new BMO Financial/Ipsos Reid poll, which found that 18% of men and 12% of women plan to run their own business until the grim reaper comes calling.

Other, less ambitious boomers say they plan to run their businesses for more than 10 years (21%), while 38% say they’ll run their operations for another six to 10 years.

Not only are boomers planning to work longer, they’re also going to put in long hours. Forty-eight per cent of men and 39% of women surveyed say they’ll work 26–40 weeks each year at their businesses, while one in seven men and one in 10 women will work more than 40 hours a week.

“These findings are consistent with our ongoing research that clearly indicates boomers expect to keep working into their so-called retirement years. Indeed, many are looking at this next phase of their lives as an opportunity to start new careers and new businesses,” says Kris Vikmanis, head of retirement market, BMO Financial Group.

The poll surveyed boomers who “retired” early to start their own businesses. Of those surveyed, 46% of men and 34% of women said keeping busy was the main reason for starting a business.

As for what businesses boomers are starting, consulting topped the list, with 33% of men and 20% of women indicating they currently or plan to consult in retirement.

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Royal Bank buying bank common shares

(October 18, 2007) The Royal Bank of Canada is making moves to repurchase for cancellation up to 20 million common shares, or 1.6% of the bank’s outstanding common shares.

The bank revealed Wednesday that it is filing a notice of intention with the Toronto Stock Exchange.

Once the TSX accepts the notice, the bank will be allowed to purchase the shares for up to a year.

The Royal Bank says that the share repurchase will let it balance the “imperatives of maintaining solid capital rations with the ongoing need to generate shareholder value.”

(10/18/07)