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Europe Scorched by Record Heatwave: France and Italy Take Emergency Measures

As a blistering heatwave tightens its grip on Europe, countries are scrambling to protect citizens from soaring temperatures and mounting health risks. France has shuttered over 1,350 schools  and closed the top floor of the Eiffel Tower as temperatures surged past 40°C (104°F)  in several regions. Sixteen French departments are now under the highest heat alert, with authorities urging people to stay hydrated and indoors during peak hours. Meanwhile, Italy has imposed restrictions on outdoor work , particularly in agriculture and construction, during the hottest parts of the day. Cities like Rome, Milan, and Venice are under red alerts, with hospitals reporting a spike in heat-related illnesses. The Mediterranean Sea has also hit record highs, with waters in Spain’s Balearic Sea reaching 30°C , up to 6 degrees above average. Scientists warn that Europe—already warming at twice the global average —is facing increasingly frequent and intense heatwaves due to climate change. New ...
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Navigating the Hurdle: Bank of Canada’s Dilemma on Rate Cuts

                                     Bank of Canada

The Bank of Canada’s June 5 interest rate call is approaching, and with it comes the tantalizing possibility of a first interest rate cut in over four years. However, there are still hurdles to clear before the central bank can pull the trigger, as one Big Six bank economist argues.

After blockbuster April jobs numbers left markets second-guessing the wisdom of calls for a June rate trim, attention shifted to Canada’s May 21 consumer price index (CPI) report. Many consider this report key to the next rate decision. Bank of Montreal’s chief economist, Douglas Porter, called the backpedaling on a June cut “kneejerk,” acknowledging that the surprise addition of 90,000 new jobs “will give the bank some pause.”

However, Porter is wary of placing too much importance on one “lone” CPI report. He points out that U.S. inflation poses a significant hurdle for the Bank of Canada and rate cuts. Recently, U.S. inflation has accelerated, causing markets to erase almost all Federal Reserve interest rate cuts for 2024, except for possibly one in December. Core prices (excluding food and energy) rose 0.4% from February to March, maintaining an accelerated pace. Measured year-over-year, core prices were up 3.8%, unchanged from the rise in February. The Fed closely tracks core prices because they provide insight into where inflation is headed.

Bank of Montreal expects overall inflation to come in at 0.4% month over month for April, matching last month’s results. Core inflation, excluding food and energy, is projected to rise 0.3% in April from March. Economist Claire Fan at Royal Bank of Canada anticipates some slowing in U.S. inflation, calling for year-over-year core price growth to decelerate to 3.6% from 3.8% in March. However, she emphasizes that it will take more than one softer price report to calm inflation fears.

Looking at U.S. inflation through a wider lens, Derek Holt, an economist at Bank of Nova Scotia, notes that core, month-over-month U.S. inflation is running at a “too hot” four percent annualized.

In summary, while the Bank of Canada contemplates rate cuts, it must navigate the challenge posed by U.S. inflation. The upcoming CPI report will be closely watched, but the broader economic context remains critical for informed decisions.


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