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These are stories Report on Business is following Wednesday, March 5, 2014.

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Poloz sees no meltdown
Not that this will stop the naysayers, but the Bank of Canada reiterated today that it still expects a soft landing in the housing market and "stabilizing" consumer debts.

Today's statement from the central bank follows a string of downbeat reports and comments about the state of, and outlook for, Canada's as-yet resilient residential real estate market, some fearing a bubble about to burst.

Deutsche Bank, for example, believes Canadian housing is overvalued to the tune of 60 per cent, while Nouriel Roubini, who famously predicted the financial crisis, has also cited signs of frothiness. Toronto-Dominion Bank, in turn, believes prices are some 10 per cent too high.

Not so the Bank of Canada's policy-setting group, which held its benchmark interest rate steady this morning and again gave no signal on where rates are headed, saying that will depend on the data.

"Recent data support the bank's expectation of a soft landing in the housing market and stabilizing debt-to-income ratios for households," said governor Stephen Poloz and his colleagues.

"The risks associated with elevated household imbalances have not materially changed," they added.

Still, noted economist Derek Holt of Bank of Nova Scotia, Mr. Poloz will want to see how the key spring housing market fares before deciding on any shift in policy, one way or the other.

"That is one of the criteria before potentially reassessing rate risks in either direction," Mr. Holt said.

"Essentially the BoC would want to test its view – and everyone else's by now – that the pick-up in housing market activity last spring and summer was temporary and came at the expense of future sales," he added.

"That's because people with 90- to 120-day mortgage rate commitments that dated back to last spring, before Bernanke started taper talk, feared rising mortgage rates and were more likely to purchase before rates rose further."

Mr. Holt was referring to the pullback, or "tapering," of the U.S. central bank's huge bond-buying scheme, known as quantitative easing, which began when Ben Bernanke was still Federal Reserve chairman.

The Bank of Canada, of course, notably under former governor Mark Carney, had been concerned about the record debt burdens being carried by Canadian families. So much so that he threatened a rate hike to cool things down. Or, as the central bank puts it, fix household imbalances.

Finance Minister Jim Flaherty moved at the same time, with mortgage restrictions also aimed at stopping a bubble from bursting.

Since then, consumer credit growth has slowed, though debts remain swollen.

The idea here is that Mr. Poloz won't signal anything until he can determine the state of play in the spring housing market and what it means to mortgage borrowing.

"Sales have fallen over recent months but the key test is the spring market when volumes normally take off," said Mr. Holt.

"So in other words, last summer may have just been a fairly standard short-term pick up on a correcting path in a market still characterized by record highs across every housing and household finance variable just as cyclical supports wane, including soft trend job growth and continued mortgage rule tightening."

As The Globe and Mail's Tara Perkins reports, Canada Mortgage and Housing Corp. moved just last week to hike insurance premiums for the first time since the 1990s.

Chief economist David Rosenberg of Gluskin Sheff + Associates also weighed in today, referring to a recent call by Pimco, the world's biggest bond fund, for a drop in the Canadian housing market of 10 per cent to 20 per cent, in real terms, over the next few years. Pimco sees a gradual decline, not a crash.

"My goodness," said Mr. Rosenberg.

"Now the folks at Pimco are calling for a huge correction in the Canadian real estate market. As expensive as it is, 20-per-cent price corrections will need a shock. Likely an interest rate shock. And that is still very likely years away."

Poloz holds the line
The Bank of Canada also said today that it expects the economy to be on the soft side in the current quarter of the year as exports "underperform" and business investment refuses to pick up, the Bank of Canada warned today.

As The Globe and Mail's Barrie McKenna reports, the central bank under governor Stephen Poloz made no change to policy, continuing to signal that any change in its benchmark interest rate will depend on how the data changes, though it continued to stress the low level of inflation.

The key rate has held at 1 per cent for more than three years now.

"The bank still expects underlying growth of around 2.5 per cent in 2014, with the current quarter likely to be softer," Mr. Poloz and his colleagues said in their statement.

"Exports have been a little stronger than previously thought but continue to underperform, and overall business investment has yet to pick up."

They also pointed to heightened volatility in global markets, and noted that the Ukraine crisis has "added to geopolitical uncertainty."

Marchionne on Chrysler
Sergio Marchionne says he doesn't want politicians to "screw around" with Chrysler Group LLC's spending program.

At an auto show in Geneva today, the chief executive officer of both Chrysler and its parent, Fiat, shed more light on the auto maker's surprise decision yesterday to pull its request for aid from the governments of Canada and the province of Ontario.

As Adrian Morrow, Greg Keenan and Steven Chase report, Chrysler had been looking for at least $700-million to help fund a $3.6-billion program at two Ontario factories.

But that became a "political football," the company said in a statement yesterday.

"I don't want politicians to screw around with the capital expenditure program," Mr. Marchionne told reporters today, according to Bloomberg News.

"This is not their business. I am not here to try to satisfy people's egos or politicians' ambitions. I make cars, as simple as that."

Cisco taps Toronto
Cisco Systems Inc. has chosen Toronto as one of its four new global innovation hubs, a move it says represents an investment of $100-million in the city over 10 years, The Globe and Mail's Tavia Grant reports.

Canada's largest city joins Songdo, South Korea, Rio de Janeiro, Brazil and another as-yet unnamed location that have been slated as centres for innovation, the company said today.

The world's largest maker of computer-networking equipment said it will focus on opportunities around the so-called "Internet of everything," helping start-ups and established companies "while fostering Canadian-based innovation."

Many will welcome the news, given that Canada has lagged its peers in measures of innovation, particularly in venture capital investment and business R&D spending.

EU aids Ukraine
The European Union is coming to the aid of Ukraine, unveiling a package worth the equivalent of $15-billion (U.S.).

"The most immediate priority for the EU is to contribute to a peaceful solution to the current crisis, in full respect of international law," European Commission chief Jose Manuel Barroso said in a statement today.

"In parallel, the international community should mobilize to help Ukraine stabilise its economic and financial situation."

The aid includes grants of €1.4-billion, loans worth €1.6-billion, up to €8-billion from the European Investment Bank, and other measures.

Don't loosen rules: Experts
Three privacy officials are warning today against loosening controls over collecting and using personal data.

Ontario's privacy commissioner, Ann Cavoukian, and her colleagues are presenting their warnings in a paper today in Washington, a response to recent proposals to change OECD guidelines.

Most privacy laws are based on the Fair Information Practice Principles, or FIPPs, of the Organization for Economic Co-operation and development, they say, and that while, yes, the world is changing in an era of "big data," people can't lose control of their personal data.

The proposal would probably "weaken rather than strengthen" privacy, if implemented, Ms. Cavoukian argues, along with Alexander Dix, the Berlin data protection and freedom of information commissioner, and Khaled El Emam, Canada research chair in electronic health information.

"Leaving it up to companies and governments to determine the acceptable secondary uses of personal data is a flawed proposition, that will no doubt lead to greater privacy infractions," they write, responding to the proposal for more "transparency and accountability" by those in the public and private sector who use such data.

"Inadequate restraints and a paternalistic approach could lead to what privacy advocates fear most – ubiquitous mass surveillance, facilitated by extensive and detailed profiling, sharpened information asymmetries and power imbalances, ultimately leading to various forms of discrimination, old and new," they add in the paper to a congressional committee.

They stress they are not opposed to greater accountability, but rather don't want to see "critical" principles eroded.

China sticks to growth forecasts
China is holding fast to its expectations of GDP growth, struggling to maintain the economic expansion in the face of fiscal, social and environmental threats to its prosperity, The Globe and Mail's Nathan VanderKlippe reports from Beijing.

Today, amid the grandeur of the cavernous Great Hall of the People, Premier Li Keqiang offered his "report on the work of the government," the annual Chinese address that defines how its leadership envisions the year ahead.

The most important elements of that vision suggest a country dedicated to preserving the status quo despite rising problems, in what one critic called a "mission impossible."

China is forecasting economic growth of "about 7.5 per cent" – unchanged, to the word, from last year – and budgeted a 12.2-per-cent expansion in military spending, up slightly from the previous year, but in line with a two-decade streak of hefty defence increases.

Bank of England suspends employee
The Bank of England has been caught up in a global look at alleged manipulation of foreign exchange rates, though the details are far from clear.

The central bank said today that it suspended one member of its staff, but did not elaborate.

"It is a matter of public record that the Bank of England has been conducting an internal review into allegations that Bank of England officials condoned or were informed of manipulation in the foreign exchange market or the sharing of confidential information," the central bank said in a statement.

"This extensive review of documents, e-mails and other records has to date found no evidence that Bank of England staff colluded in any way in manipulating the foreign exchange market or in sharing confidential client information," it added.

"However, the bank requires its staff to follow rigorous internal control processes and has today suspended a member of staff, pending investigation by the bank into compliance with those processes."

Adidas hit by currency woes
The turmoil in the currencies of emerging markets continues to hit some of the world's major companies.

Adidas AG today projected results this year will be hurt by the issues of the currency market.

"We finished 2013 with an exceptionally strong fourth quarter," said chief executive officer Herbert Hainer.

"Currency-neutral sales grew 12 per cent, which was above our expectations," he said in the company's earnings statement.

"This ensured that we met our revised full year targets from September, despite a further worsening of currency exchange rates. In the fourth quarter alone, negative currency effects cost us nine percentage points on the top line."

This year, the company said, its results will be "significantly impacted by currency movements."

Tie me kangaroo down
With the possible exception of a koala bear, and the kitten curled on your lap, what's cuter than a kangaroo?

Which makes one wonder what the diplomats dining with Australia's agriculture minister today will think of their dinner.

According to Bloomberg News, Barnaby Joyce told reporters in Canberra that he's serving kangaroo to a group of ambassadors at a Parliament House dinner, hoping to boost global exports of the meat.

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