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Bank of Canada Rate Decision December 2021
December 17, 2021
3:52 pm
Bill
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Norman1, can you provide a link re your comment than in Denmark Omicron is the same severity as Delta? I've looked and not found that re Denmark.

December 17, 2021
5:24 pm
Norman1
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Sure, Bill: Ontario Science Table: Update on COVID-19 Projections (December 16, 2021)

Slide #8 titled "Initial data from Denmark indicate that the percentage of cases
requiring hospital admission is not lower with Omicron".

Omicron has 0.81% hospitalization rate compared to 0.75% for other variants.

December 17, 2021
5:39 pm
Bill
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Thanks, Norman1, that is a bit alarming, though the graph itself shows no such comparison (Delta vs Omicron). It also shows a recent leveling off of Hospital Occupancy yet a steep rise in cases. So to me the graph doesn't show what the heading or the subscript is referring to, if I'm reading it right. Hard to say yet, early days, we'll have to see.

December 17, 2021
6:42 pm
Loonie
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The situation in Denmark bears close wtching, but we are really not given enough data here. The case numbers for omicron are still small there and we aren't given any info about their vaccination status for any variant, the time from last vaccine has not been tracked, time lag since onset of illnes, how many vaccines, etc.

Thanks for presenting this, Norman. I probably wouldn't have serached for it.

EDIT: I made changes because I read further into the document. It's worth reading.

December 17, 2021
7:21 pm
Norman1
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It's not the graph. It's the table under the graph:

Omicron Other strains
Cases 3,437 88,940
Hospital admissions 28 665
Percentage hospitalized 0.81% 0.75%
December 17, 2021
8:18 pm
Loonie
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Here is a really important statement from the document Norman presented:

"Vaccine effectiveness against Omicron infection is stronger with 3 doses: 75% (Pfizer; UK)"
While I don't dispute the value of the vaccine, this is significantly less protection than we had from the second dose against earlier variants, which was in the 90s. Add to that the much increased transmissability of omicron and you have a recipe for an enormous problem. Elsewhere it suggest the effectiveness of the third dose is at about one month, so hurrying in December may not protect over the holidays.

December 17, 2021
8:34 pm
AltaRed
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The Denmark data is worrisome. I would also focus on the UK which should have some correlated hospitalization data within about a week or so. The time lag is frustrating but it is what it is to get enough appropriate data.

As always, the data may be hard to interpret due to so many variables like age, when last vaccinated, underlying health conditions, etc.

December 17, 2021
8:49 pm
Norman1
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For Denmark, 4,498,644 / 5,867,412 = 76.7% of total population is fully vaccinated.

For Canada, 76.26% of total population is fully vaccinated.

Denmark is a close match to Canada as far as full vaccination rates.

I agree it is quite early. Denmark detected its first Omicron case on November 22.

I think it is good keep both the South Africa experience and the Denmark experience in mind as the situation develops. People seem to be unaware of what is happening in Denmark.

I read disturbing reader comments on the Globe & Mail site suggesting that Omicron should just be allowed to sweep through because it is "mild" and would end up immunizing everyone.

December 17, 2021
8:57 pm
Vatox
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I do like how Britain raised rates despite the effects of Omicron. Perhaps Canada may get tough on inflation.

https://www.theguardian.com/business/2021/dec/16/omicron-causing-sharp-slowdown-in-britains-economy-figures-show

December 17, 2021
9:01 pm
HermanH
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Norman1 said
I read disturbing reader comments on the Globe & Mail site suggesting that Omicron should just be allowed to sweep through because it is "mild" and would end up immunizing everyone.  

It's not just a reader comment. A regularly appearing doctor (on CBC, I think) actually said on air that Omicron might have an upside in that it sweeps through and replaces all previous variants (i.e. the way the original CoVid has mostly disappeared.) He also said that it would then disappear after it passed. I consider that possibility quite ludicrous.

December 17, 2021
9:25 pm
AltaRed
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It is indeed silly because other covid variants will pop up somewhere, either in Canada, or any one of 100 other nations and then do its thing....rinse and repeat.

December 17, 2021
9:33 pm
Norman1
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Loonie said
Here is a really important statement from the document Norman presented:

"Vaccine effectiveness against Omicron infection is stronger with 3 doses: 75% (Pfizer; UK)"
While I don't dispute the value of the vaccine, this is significantly less protection than we had from the second dose against earlier variants, which was in the 90s. Add to that the much increased transmissability of omicron and you have a recipe for an enormous problem. …

Fortunately, it is better than that. The 75% is the protection against Omicron infection. The three-dose protection against Omicron hospitalization would be higher.

Global News: Pfizer’s vaccine 70% effective against hospitalization from Omicron reported that two doses have 33% protection against infection and 70% protection against hospitalization.

December 17, 2021
10:52 pm
Vatox
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Let’s stop talking about immunization and effectiveness against variants. Try to stay with financial issues.

December 17, 2021
11:03 pm
HermanH
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Vatox said
Let’s stop talking about immunization and effectiveness against variants. Try to stay with financial issues.  

Good suggestion. I shall try not to stray too afar.

With the surge in Omicron and likely 5,6,7th... waves, do you believe that there will be a future national lockdown?

Regardless of lockdown, do you believe that the BoC can keep the interest rate at virtual zero and ignore all consequences?

I think that the BoC will hold interest rates at zero and just keep impoverishing future generations, so long as health authorities restrict economic activity; the premise being, 'We must do whatever it takes to fight and survive the fire now, before even considering the long-term effects of such efforts.'

December 17, 2021
11:15 pm
Loonie
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Vatox said
Let’s stop talking about immunization and effectiveness against variants. Try to stay with financial issues.  

The problem is, these things are all entwined. Economic decisions are effectively being made based on assumptions about vaccines and other public health measures. People are allowed to keep businesses open on the theory that vaccines will be adequate. Underpaid and underappreciated exhausted nurses are leaving ICUs in droves. and so on. When parts of this intertwined system fail, it creates a financial mess. right now, it's close to the breaking point on many fronts.

What else would you like to say about the BoC rate decision?

My impression of the BoC these days is that it's a plodding reactive organization that will only move if dragged.
Their view is way too narrow. They just keep hoping issues will go away.

December 18, 2021
12:07 am
Norman1
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I agree. Omicron's effect on the supply chain can neutralize the impact of interest rate hikes.

I'm pretty certain the central banks understand that higher interest rates can only lower demand for goods and services and not increase their supply.

Senator Diane Bellemare, an economist, was quoted in No one likes inflation, but raising interest rates won’t lower your grocery prices:

Raising interest rates may cool off demand, but today’s high prices are tightly tied to supply issues — goods not coming through to manufacturers or retailers in a predictable way, and global markets not able to react quickly enough to changing tastes of consumers.

Higher interest rates will reduce housing prices. The same monthly mortgage payments won't be able to service as much with a higher rate. But, higher rates won't reduce the price of things have been in short supply because of COVID.

December 18, 2021
12:42 am
Vatox
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Loonie said

The problem is, these things are all entwined. Economic decisions are effectively being made based on assumptions about vaccines and other public health measures. People are allowed to keep businesses open on the theory that vaccines will be adequate.

That’s not a complete assessment. Since some are vaccinated and some are unvaccinated, the only measures are, infection numbers and hospitalizations. The efficacy of vaccines doesn’t determine restrictions, lockdowns or the economic decisions. Talking about infection numbers and hospitalizations would be relevant, but the vaccines say only one thing, the more people that get them, the better off we will be. Therefore it’s completely irrelevant to discuss efficacy of the vaccines. They don’t make any economic decisions based on vaccine efficacy, only on the results of the virus transmission and severity.

December 18, 2021
5:15 am
savemoresaveoften
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If higher interest rates help to dampen real estate demand, I am all for it. I would even argue a healthy 20% price correction is necessary in the housing market. Some late buyers will take the pain, but then thats no different from buying the peak of a stock bubble.
Agree higher interest rates will have zero impact on food prices, esp at grocery stores.
Eat out is getting so expensive it is rising at the same pace as real estate prices, not the headline inflation.

December 18, 2021
6:04 am
Bill
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Maybe the economic impacts won't be so bad, it's not all bad news on Omicron, including from Public Health Agency of Canada (ignore editorializing in link):
https://torontosun.com/opinion/editorials/editorial-good-news-on-omicron-severity

December 18, 2021
9:43 am
Norman1
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I don't know if that news is really good.

1.7% hospitalization rate in South Africa in their current Omicron-driven fourth wave. That's better than the 19% they had in week #2 of their third wave driven by Delta. But, that's more than double Denmark's current 0.75% hospitalization rate from non-Omicron infections and 0.81% hospitalizations from Omicron infections.

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