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Bank of Canada keeps rate on hold, sees brighter economic outlook

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OTTAWA — The Bank of Canada provided a rosy revision to its economic outlook Wednesday but kept its key rate at 0.25 per cent in a sign that it won’t count its chickens before they hatch.

The improving conditions are why the bank also said Wednesday it will ease off federal government bond purchases that form part of its quantitative-easing program designed to aid the economy during .

And it pulled forward its expectations for when the economy will be strong enough to handle a rise in rates. The bank now sees that an inflation back at its two per cent target later in 2022, rather than some time in 2023.

But first the economy faces a test in the form of the deadly third wave of the COVID-19 pandemic, which the bank said threatens the pace of the recovery and growth in the jobs market particularly highly affected sectors.

Governor Tiff Macklem said much will rest on whether households and businesses show the same resiliency as they did during the second wave of the pandemic at the start the year.

“Vaccines are rolling out, and there are brighter, brighter days ahead and reflecting that we have revised up our outlook,” Macklem said during a late-morning press conference.

“But … it is still going to take some time to get to a complete recovery. This third wave is a setback. It is straining health-care systems in part of the country.”

He added that the hardest-hit sectors of the economy will be most affected.

The effect will be sharpest on high-contact sectors like restaurants, the bank said, adding that the ripples will prolong the unevenness in the labour market’s recovery from historic job losses one year ago.

The bank said it expects tighter restrictions during this third wave of COVID-19 to lead to job losses, mostly in low-wage and part-time work, as part of a material, but temporary effect on the economy.

It will take time for jobless Canadians and those looking to join the labour force to find work, which the bank said may lead some households to hold on to the savings accumulated over the past year as a safety net instead of spending them all at once.

On average, Canadians have accumulated $5,800 in extra savings through the pandemic.

“We really need to be careful about averages when it comes to this recession because it has been so uneven,” Finance Minister Chrystia Freeland said Wednesday at an event hosted by the Canadian Chamber of Commerce.

Freeland said she wanted employment and the economy’s capacity back to, and then above, pre-crisis levels as fast as possible.

Based on employment figures for March, the central bank estimated that about 300,000 more people would need to be hired to get back to pre-pandemic levels, or 475,000 when factoring in population growth.

Macklem said the bank would keep a close eye on the labour market among a range of indicators before deciding when the time was right to raise rates.

“You’re seeing a recession and recovery like we’ve never experienced before,” Macklem said, adding later: “We’re looking for a complete recovery, and that’s going to take some time.”

The bank’s prediction for economic growth this year of 6.5 per cent, fuelled by consumer spending, is 2.5 percentage points higher than its last quarterly outlook and above the 5.8 per cent predicted in Monday’s federal budget.

The central bank expects economic growth to moderate after that, hitting 3.7 per cent next year and 3.25 per cent the year after. The federal budget forecasted four per cent next year, and 2.1 per cent in 2023.

Freeland said she was confident in the GDP projections based on a survey of private sector economists. She called the figures prudent and reasonable.

The Bank of Canada’s forecast doesn’t take into effect the full suite of stimulus outlined in the federal budget. It baked in $85 billion in new spending, rather than the $101 billion over three years the Liberals promised in Monday’s budget.

Macklem said the stimulus from federal and provincial governments would help drive growth in the coming years, but not have an impact on inflation.

Inflation is expected to hover at the top range of the bank’s comfort zone, but only because prices now are being compared with the weak levels seen one year ago at the onset of the pandemic.

Statistics Canada said Wednesday the consumer price index in March was up 2.2 per cent compared with a year ago, noting the year-over-year impact that should continue for the next few months.

Macklem also expressed concern about the heated housing market. He said the bank’s worry is that people decide to buy on speculation that prices will rise indefinitely and that they will overstretch themselves financially.

He welcomed a proposal by a federal bank regulator to tighten its stress test for uninsured mortgages. Macklem also said a federal budget pledge to place a tax on vacant home owned by non-Canadian residents should temper speculation and add supply so it can begin catching up with demand.

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Future of Ottawa: Coffee with Francis Bueckert

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Francis Bueckert: When it comes to the current landscape of coffee-roasting companies and independent cafes in Ottawa, I think we are at a really interesting moment in time. There are more local roasters that are doing artisanal small-batch production—with more attention to the quality and origin of the beans.

With larger corporations such as Starbucks closing locations, it has opened a bit of space for local players to grow. We have been lucky to work with many folks in the coffee-roasting community, and we have found that there is a willingness to collaborate among different coffee roasters. For example, when Cloudforest started back in 2014, we were roasting our coffee at Happy Goat and it was the expertise of their head roaster Hans that helped me learn how to roast. Other companies such as Brown Bag Coffee have also lent a hand when we needed extra roasting capacity. There are others, such as Lulo, Mighty Valley Coffee, Bluebarn, The Artery, and Little Victories that are also part of the growing local coffee community. It’s small roasters like these who have shown me what a coffee community can look like, and that we can help to elevate each other, rather than being locked in competition.

If you care to make a prediction… What’s happening to the local café industry in 2021?

We believe that there is hope and that 2021 can be a big pivot year for small roasters and cafes.

This year will not be ideal from a business point of view. However, it could create a shift in people’s attitude toward where they get their coffee. We are holding out hope that people will support the roasters and cafes that are local to help them economically survive what is in all reality a very difficult time.

It all depends on where consumers decide to go this year. People are starting to recognize that supporting large corporations at this moment will be at the cost of the local roasters and cafes. There is the growing realization that a future where there is only Amazon, Walmart, and Starbucks would be pretty bleak. So we have an opportunity this year to support the kind of local businesses that we want to see thrive.

In your wildest dreams, what will the landscape for local coffee roasters and cafés look like in your lifetime?

In my wildest dreams, all of the coffee roasters and cafés would be locally owned and independent. They would all be focused on direct trade and artisanal coffee. Each different coffee roaster and café would know exactly where their coffee came from. Ideally, each company would be a partnership between the farmers who grow the beans and the people here selling them. There would be a focus on how to cooperate and collaborate with the farmers in the countries of origin to share the benefits around. We would all work together and share orders of cups, lids, and other packaging so that we could get better bulk pricing. In this way, we would make our local coffee community so efficient that the large corporate coffee companies wouldn’t even be able to compete.

We would also like to see people use coffee as a way to create social good. For example, we started Cloudforest as a way of helping support farmers in Ecuador who were taking a stand against large mining companies. This remote community stood up to protect their environment, so that they could have clean drinking water and soil for the next generation. They started an organic coffee cooperative to help show that there are other models of development, and we are doing our part year after year to help support their vision. They have a vision of development that does not include mass deforestation and contamination, and organic coffee is a key (among others) to show that another way forward is possible.

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Special events in the Ottawa Valley dominate annual OVTA tourism awards

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The Ottawa Valley Tourist Association hopes that its annual tourism awards will provide a little sunshine during what is a dark time for local tourism operators because of the pandemic.

The Ottawa Valley Tourism Awards are presented annually by the Ottawa Valley Tourist Association (OVTA) to individuals, businesses, and events that recognize the importance of working together for the growth of the local tourism industry, as well as offering exceptional visitor experiences.

“After a year that saw a lot of businesses in the hospitality and tourism industry being challenged like never before, the annual Ottawa Valley Tourism Awards represent a bit of light on the horizon” said Chris Hinsperger, co-owner of the Bonnechere Caves.

The Ottawa Valley Tourist Association’s (OVTA) Awards Committee co-chairpersons, Meghan James and Chris Hinsperger, said they were very pleased with the recent nominations received, especially in the Special Events category. Submissions were received for The Farm to Fork Dinner Series at the Whitewater Inn; Light up the Valley; The Eganville Curling Clubs’ Rock the Rings; The Ontario Festival of Small Halls ; The Bonnechere Caves On-line Underground Concert Series; The Opeongo Nordic Ski Clubs’ Ski Loppet; The Tour de Bonnechere — Ghost de Tour 2020; and The Bonnechere Caves Rock ‘n Roll Parking Lot Picnic.

“During a time when communities were challenged, it is nice to see that people still made an effort to get together and celebrate, albeit under certain conditions. It just shows the creativity and resiliency of our tourism Community here in the valley” said Meghan James, director of sales at the Pembroke Best Western.

There are three Award categories: The Marilyn Alexander Tourism Champion Award, The Business of Distinction and The Special Event of the Year.

Hinsperger, is excited about this year’s awards.

“During this pandemic the hospitality and tourism industry was the first to be hit, was the hardest hit and will be the last of our industries to fully recover. As Valley entrepreneurs we owe it to ourselves, to our businesses and to our communities to be an active part of that recovery. Our livelihood and economic recovery depends on our efforts. And we will get back to welcoming people from all over the world to share a little bit of the place we are privileged to call home. This awards process leaves myself and others fully optimistic about our positive outcomes.”

Award winners will be announced at the Ottawa Valley Tourist Association’s virtual annual general meeting on Monday, May 31.

The OVTA is the destination marketing organization for the Upper Ottawa Valley and proudly represents more than 200 tourism businesses, comprised of attractions and outfitters, accommodation, food, beverage and retail establishments, artists and galleries, municipalities, as well as media and industry suppliers. The OVTA is supported by the County of Renfrew, Renfrew County municipalities and the City of Pembroke.

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Future of Ottawa: Farming with Jeremy Colbeck

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Jeremy Colbeck: Well first, let’s talk about what we mean by farming. Although farms, and farming as an occupation, are in decline across Canada, they are still a major part of our rural landscape. That’s even more true for a strange city like Ottawa which includes a LOT of rural areas and whose urban boundary takes, what, three hours to cross? About 40 per cent of the rural land in Ottawa is farmland. Most of that farming is corn and soybean cash-crop, as well as some dairy and livestock farming. That’s mostly conventional farming (the kind that is profitable but not exactly where you take your kids on a Saturday).

There are also a lot of agri-tourism businesses in Ottawa, which give you that oh-so-good Saturday spot for family donkey-petting and apple-picking. And it’s totally understandable from a business perspective, but sometimes surprising to find out, that even though they grow some of the Christmas trees they sell, they might also be reselling some that come from much larger farms far away. The farmland around Ottawa is also inflated in price because of its proximity to the city, where it is in demand by would-be hobby farmers—folks who want to do some farming on their property in their spare time but make their money (to subsidize their small-scale farming habit) elsewhere. Unfortunately, many of these properties will have large mansions built on them, which will then make them completely unaffordable for the average farmer

There’s also a segment of small-to-medium-sized Ottawa farms that grow “premium” (artisanal, unique, extra-fresh, ecologically- or organically-grown etc…) products that they sell directly to local eaters via farmers’ markets or other direct marketing channels, including on-farm stores and farm stands. That’s where BeetBox fits in.

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