Just briefly....

 A few pre-holiday tidbits....

Canada's headline CPI rose 1.0 percent year-on-year in November, up from 0.7 percent in October. StatsCan's website seems to be taking an early Christmas break, so here is a link to the CBC's report. The increase was the fastest since pre-pandemic days and was also higher than the analysts' consensus, which looked for a 0.8 percent rise. Gasoline prices are still down by double digits from a year ago: the increase in CPI if gasoline is excluded stood at 1.3 percent.  We are still far from the point where the Bank of Canada would even begin to contemplate any sort of monetary tightening, but the upside surprise here is a useful reminder that once the pandemic starts to fade, inflation may well accelerate rather faster than the Bank is currently expecting. 

Speaking of the Bank of Canada, Governor Tiff Macklem offered some thoughts this week on the subject of "a sustainable recovery".  He cautioned that the strong second wave of COVID would weigh on growth in the early part of 2021, despite the hope offered by vaccines. Looking beyond that, he suggested that increased investment and increased trade would be needed to sustain the recovery, which could not simply depend on a rebound in consumption. He restated an old Canadian hope, largely a vain one, that the country could broaden its export markets away from its traditional dependence on the United States, but suggested even that would not be sufficient: "We do need to develop new, fast-growing markets for our products, but we also need to develop new, fast-growing products for our markets."

Lastly, and offered (almost) without comment, check out this column from the Financial Post. Considering the Post's habitual antipathy to government debt (well, to government anything, really) it is a surprisingly balanced view of the role of fiscal and monetary policy in facilitating Canada's recovery from the pandemic. If you look past the headline, you will find that it comes close to admitting that there is no real fiscal constraint in play right now. Can it be that Modern Monetary Theory has established a foothold at the FP?