Briefly:

Previous Brieflies this week: | MON | TUE | WED | THU |

(July 15, 2008) The Bank of Canada held steady on its trend-setting overnight rate, maintaining its target of 3.00% for the key rate. The operating band remains unchanged, as does the bank rate, at 3.25%.

The Bank pointed to continued weakness in the U.S. economy and “ongoing turbulence in global financial markets” as factors in its decision in not raising rates. While these two issues are unfolding largely as the Bank expected, it was taken off guard by another factor: inflation.

Sharp increases in the price of many commodities outpaced expectations, making the threat of inflation more credible, so a rate cut was out of the question as well.

“Total CPI inflation over the next year is expected to be much higher than projected at the time of the April [Monetary Policy] Report,” the Bank said in a release. “Assuming energy prices follow current futures prices over the projection period, total CPI inflation is projected to rise temporarily above 4%, peaking in the first quarter of 2009.”

The Bank went on to predict more stability in energy prices in the second half of 2009, which will trim inflation back to the Bank’s 2% target rate, while core inflation should be about 1.5%.

While economic growth was below expectations in the first quarter, domestic demand continued to expand “at a solid pace.” Overall GDP growth is expected to be quite tame in 2008, at 1%, but 2009 and 2010 are expected to see an improvement, with GDP growth of 2.3% and 3.3%, respectively.

The Bank’s detailed projection for the economy and inflation, and its assessment of risks to the projection, will be published in the Monetary Policy Report Update on July 17, 2008.

• • •

Gluskin Sheff shuffles execs

(July 15, 2008) Gluskin Sheff + Associates has announced the appointment of Jeremy Freedman to the role of deputy chief executive officer, in addition to his current roles as executive vice-president and chief operating officer.

The company also announced the appointment of Bill Webb, currently vice-president and portfolio manager, to deputy chief investment officer.

“Jeremy and Bill have contributed very significantly to the success of Gluskin Sheff over their many years with the firm,” said Gerald Sheff, chairman and CEO. “The board of directors is making these appointments as part of an ongoing transition and succession planning process.”

• • •

More calls for single regulator

(July 15, 2008) There are more calls today for the creation of a single securities regulator in Canada, in response to the Expert Panel on Securities Regulation’s call for comment on the matter.

A single securities act would facilitate competitiveness and innovation in the industry, should be overseen by an independent national securities regulator, and must be implemented, according to the submission from Financial Executives International Canada (FEI Canada).

“A regulatory framework founded on high-level principles better addresses the ongoing changes in Canada’s financial marketplace,” said Michael Conway, CEO and national president of FEI Canada. “This form of regulation would create a more agile system, which inevitably elevates the stature of Canadian financial markets globally.”

While the structure should be principles-based, Conway said, it should also include some rules to more clearly spell out certain elements.

“It is imperative that Canada’s regulatory system supports and enhances the competitiveness of the Canadian economy and creates a responsive environment for both domestic and international issuers to quickly access the capital markets,” Conway said.

The Canadian Bankers Association also called for a single regulator, saying that the passport model was already a failure.

“The existing passport model of securities regulation simply doesn’t deliver, especially for small- and medium-sized businesses [SMEs] and individual investors, particularly in Quebec and smaller provinces,” said Nancy Hughes Anthony, president and CEO of the CBA. “Over 90% of capital market transactions take place in more than one province or territory, so it makes sense that our regulatory structure should reflect this economic reality.

“We agree with the federal government that it’s time to take a fresh look at securities reform in the broader context of enhancing Canada’s ability to compete internationally.”

(07/15/08)