2 black men arrested at Starbucks get an apology from police


Rashon Nelson initially brushed it off when the Starbucks manager told him he couldn’t use the restroom because he wasn’t a paying customer.

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He thought nothing of it when he and his childhood friend and business partner, Donte Robinson, were approached at their table and were asked if they needed help. The 23-year-old entrepreneurs declined, explaining they were just waiting for a business meeting.

A few minutes later, they hardly noticed when the police came into the coffee shop — until officers started walking in their direction.

“That’s when we knew she called the police on us,” Nelson told The Associated Press in the first interview by the two black men since video of their trespassing arrests April 12 touched off a furor around the U.S. over racial profiling, or what has been dubbed “retail racism” or “shopping while black.”

Nelson and Robinson were led away in handcuffs from the shop in the city’s well-to-do Rittenhouse Square neighborhood in an incident recorded on a white customer’s cellphone.

In the week since, the men have met with Starbucks’ apologetic CEO and have started pushing for lasting change at the coffee-shop chain, including new policies on discrimination and ejecting customers.

“We do want to make sure it doesn’t happen to anybody again,” Robinson said. “What if it wasn’t us sitting there? What if it was the kid that didn’t know somebody that knew somebody? Do they make it to jail? Do they die? What happens?”

On Thursday, they also got an apology from Philadelphia Police Commissioner Richard Ross, a black man who at first staunchly defended his officers’ handling of the incident.

“I should have said the officers acted within the scope of the law, and not that they didn’t do anything wrong,” Ross said. “Words are very important.”

At a news conference, a somber Ross said he “failed miserably” in addressing the arrests. He said that the issue of race is not lost on him and that he shouldn’t be the person making things worse. “Shame on me if, in any way, I’ve done that,” he said.

He also said the police department did not have a policy for dealing for such situations but does now, and it will be released soon.

Nelson and Robinson said they went to the Starbucks to meet Andrew Yaffe, a white local businessman, over a potential real estate opportunity. Three officers showed up not long after. Nelson said they weren’t questioned but were told to leave immediately.

Yaffe showed up as the men were being handcuffed and could be seen in the video demanding an explanation for the officers’ actions. Nelson and Robinson did not resist arrest.

“When you know that you did nothing wrong, how do you really react to it?” Nelson said. “You can either be ignorant or you can show some type of sophistication and act like you have class. That was the choice we had.”

It was not their first encounter with police. But neither had been arrested before, setting them apart from many of those they grew up with in their gritty southwest Philadelphia neighborhood.

Nelson and Robinson spent hours in a jail cell and were released after midnight, when the district attorney declined to prosecute them.

Nelson said he wondered if he’d make it home alive.

“Any time I’m encountered by cops, I can honestly say it’s a thought that runs through my mind,” Nelson said. “You never know what’s going to happen.”

Starbucks has said the coffee shop where the arrests occurred has a policy that restrooms are for paying customers only, but the company has no overall policy. The men’s attorney, Stewart Cohen, said they were illegally profiled.

The arrests prompted protests at the Starbucks and a national boycott. Kevin Johnson, CEO of the Seattle-based company, came to Philadelphia to meet with the men, called the arrests “reprehensible” and ordered more than 8,000 Starbucks stores closed on the afternoon of May 29 so that nearly 175,000 employees can receive training on unconscious bias.

Robinson said that he appreciates the public support but that anger and boycotting Starbucks are not the solution.

The men said they are looking for more lasting results and are in mediation with Starbucks to make changes, including the posting in stores of a customer bill of rights; the adoption of new policies on customer ejections and racial discrimination; and independent investigations of complaints.

“You go from being someone who’s just trying to be an entrepreneur, having your own dreams and aspirations, and then this happens,” Nelson said. “How do you handle it? Do you stand up? Do you fight? Do you sit down and just watch everyone else fight for you? Do you let it slide, like we let everything else slide with injustice?”


Whack is The Associated Press’ national writer for race and ethnicity. Follow her work on Twitter at http://www.twitter.com/emarvelous

Southwest Airlines sought more time for engine inspections


Southwest Airlines sought more time last year to inspect fan blades like the one that snapped off during one of its flights Tuesday in an engine failure that left a passenger dead.

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The airline opposed a recommendation by the engine manufacturer to require ultrasonic inspections of certain fan blades within 12 months, saying it needed more time to conduct the work.

Southwest made the comments last year after U.S. regulators proposed making the inspections mandatory. The Federal Aviation Administration has not yet required airlines to conduct the inspections but said late Wednesday that it would do so in the next two weeks.

The manufacturer’s recommendation for more inspections followed an engine blowup on a 2016 Southwest flight. On Tuesday, an engine on another Southwest jet exploded over Pennsylvania, and debris hit the plane. A woman was sucked partway out of the jet when a window shattered. She died later from her injuries.

The plane, a Boeing 737 bound from New York to Dallas with 149 people aboard, made an emergency landing in Philadelphia.

Passenger Andrew Needum, a Texas firefighter, said Thursday that he was helping his family and other passengers with their oxygen masks when he heard a commotion behind him. His wife nodded that it was OK for Needum to leave his family to help the injured woman.

Texas rancher Tim McGinty, of Hillsboro, said Tuesday that he and Needum struggled to pull 43-year-old Jennifer Riordan back into the plane. Needum and retired school nurse Peggy Phillips began administering CPR for about 20 minutes, until the plane landed.

Needum on Thursday declined to detail his rescue efforts out of respect for Riordan’s family.

“I feel for her family. I feel for her two kids, her husband, the community that they lived in,” an emotional Needum told reporters. “I can’t imagine what they’re going through.”

Federal investigators are still trying to determine how the window came out of the plane. Riordan, who was in a window seat in Row 14, was wearing a seat belt.

Philadelphia’s medical examiner said the banking executive and mother of two from Albuquerque, New Mexico, died from blunt-impact injuries to her head, neck and torso.

Investigators said the blade that broke off mid-flight and triggered the fatal accident was showing signs of metal fatigue — microscopic cracks from repeated use.

The National Transportation Safety Board also blamed metal fatigue for the engine failure on a Southwest plane in Florida in 2016 that was able to land safely.

That incident led manufacturer CFM International, a joint venture of General Electric Co. and France’s Safran SA, to recommend in June 2017 that airlines conduct ultrasonic inspections of fan blades on many Boeing 737s.

The FAA proposed making the recommendation mandatory in August but never issued a final decision.

On Wednesday, the FAA said it would issue a directive in the next two weeks to require the ultrasonic inspections of fan blades on some CFM56-7B engines after they reach a certain number of takeoffs and landings. Blades that fail inspection would need to be replaced.

It was not immediately clear how many planes would be affected. Last year, the FAA estimated that an order would cover 220 engines on U.S. airlines. That number could be higher now because more engines have hit the number of flights triggering an inspection.

Southwest announced its own program for similar inspections of its 700-plane fleet over the next month. United Airlines said Wednesday it has begun inspecting some of its planes.

American Airlines has about 300 planes with that type of engine, and Delta has about 185. It will not be clear until the FAA issues its rule how many will need inspections.

Tuesday’s emergency broke a string of eight straight years without a fatal accident involving a U.S. airliner.

“Engine failures like this should not occur,” Robert Sumwalt, chairman of the NTSB, said Wednesday.

Sumwalt expressed concern about such a destructive engine failure but said it was too soon to draw any conclusions about the safety of CFM56 engines or the entire fleet of Boeing 737s, the most popular airliner ever built.

It is unknown whether the FAA’s original directive would have forced Southwest to quickly inspect the engine that blew up.

Southwest CEO Gary Kelly said the plane was inspected on Sunday and nothing appeared out of order. A spokeswoman said it was a visual inspection.

The NTSB’s Sumwalt said, however, that the kind of wear seen where the missing fan blade broke off would not have been visible just by looking at the engine.


AP Airlines Writer David Koenig reported from Dallas.

Correction: Obit-Mellon story


In a story April 17 about the death of Matthew Mellon, The Associated Press reported erroneously that Mellon had died at a rehabilitation center in Cancun, Mexico. Police have confirmed that Mellon died in a Cancun hotel room prior to checking into the rehab facility.

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A corrected version of the story is below:

Billionaire banking heir Matthew Mellon dies at 54

Billionaire banking heir Matthew Mellon has died. He was 54.


Associated Press

Billionaire banking heir Matthew Mellon has died. He was 54.

Police in Cancun, Mexico, said he was found dead in a hotel room. He had struggled with drug addiction, and a rehabilitation center in the resort town said he had been due to check in there Monday.

Mellon comes from the Mellon and Drexel families of Bank of New York Mellon and Drexel Burnham Lambert.

According to Mellon’s Linked In account and documents of the Securities and Exchange Commission, he attended the Wharton School and later worked in fashion, telecommunications and finance, most recently as an adviser for the digital currency company Ripple Labs.

Mellon also served for a time as the chairman of the finance committee of the Republican Party in New York.

Mellon is survived by his first wife, fashion designer Tamara, his second wife, fashion designer Nicole Hanley, and three children.

Testifying at a trial where Mellon was acquitted of hiring a private detective to snoop into Tamara Mellon’s finances, the co-founder of Jimmy Choo shoes said she and her husband had met at a meeting of Narcotics Anonymous when both were recovering from addiction.

The two married in 1999 at Blenheim Palace, one of England’s grandest homes, with friends Elizabeth Hurley and actor Hugh Grant among the guests. They divorced several years later.

Looking At the Lithium ETF…Again

This article was originally published on ETFTrends.com.

The Global X Lithium Battery Tech ETF (NYSEARCA: LIT) was a star in 2017, surging more than 59% on its way to one of the best performances by any non-leveraged ETF. This year, things have been different for the lithium fund as it is down nearly 14% year-to-date. Some market observers are offering differing views on […]

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As Earnings Roll in, Bank ETFs Dither

This article was originally published on ETFTrends.com.

Amid a spate of first-quarter earnings report, the financial services sector, the second-largest sector weight in the SP 500, is not doing much to earn investors’ confidence. Over the past week, the Financial Select Sector SPDR (NYSEArca: XLF), the largest exchange traded fund tracking the financial services sector, is lower by nearly 1%. According to FactSet, […]

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‘We deserve better:’ Family of Colten Boushie calls for United Nations to study systemic racism in Canada

Family members of Colten Boushie delivered a fiery call for justice at the international table Wednesday, as they called for the United Nations to undertake a study of systemic racism against Indigenous people in Canada’s judicial and legal systems.

“The Canadian justice system has failed Colten, our community and Indigenous people in ways that impedes our human rights,” Jade Tootoosis, cousin to Boushie, told the United Nations Permanent Forum on Indigenous Issues, describing this failure as one of the state to uphold treaty rights.

“We deserve better. My brother Colten deserves better.”

Family shares Boushie’s story

Boushie’s family attended the forum in New York City to raise awareness about the circumstances around the 22-year-old’s death and the handling of the case.

The man from Red Pheasant First Nation, in Saskatchewan, died of a gunshot wound after he and a group of Indigenous friends drove onto the property of farmer Gerald Stanley on August 2016.

An aerial view of Gerald Stanley’s farm taken by RCMP. (RCMP)

During Stanley’s trial for second-degree murder earlier this year, the jury heard that he and his family believed the individuals were there to steal property, with Stanley expressing fears for his family’s life.

Stanley was acquitted of all charges in Boushie’s death. The Crown decided not to appeal the jury verdict.

The systemic injustices, the acquittal and the decision not to appeal show that justice is not equally applied to Indigenous people in Canada.– Jade Tootoosis, cousin of Colten Boushie

“The acquittal was celebrated by the majority of settlers on the notion that material property is worth more than an Indigenous life,” Tootoosis told the UN forum, using a term some Indigenous people use to describe non-Indigenous people who came to Canada and occupied Native lands. 

“The systemic injustices, the acquittal and the decision not to appeal show that justice is not equally applied to Indigenous people in Canada.”

She said Boushie and his family continue to be “misrepresented” in social media, with racial hatred on display.

“Colten was not a thief. He was a kind and generous young man,” she told the forum. 

Tootoosis called on the UN to have its special rapporteur study systemic racism against Indigenous people within the Canadian judicial and legal systems. The study must produce recommendations to protect the Indigenous families accessing these systems, she said.

“This will advance our calls on the Canadian government to establish a royal commission on the elimination of racism in the justice system,” Tootoosis said.

She felt only such a commission would have the authority to address what she called “the miscarriage of justice” in her cousin’s death.

Indigenous rights on global scale

Tootoosis’s speech was part of an annual two-week session to discuss Indigenous issues.

Afterward, Tootoosis and Boushie’s mother, Debbie Baptiste, described themselves as honoured to have been able to address the UN.

“We would like the justice system to change, and we would like a fair chance and an opportunity that we get heard and our rights are taken into consideration,” said Baptiste.  

Tootoosis said many at the UN forum had already heard of Boushie’s story and were full of support and prayers for his family. Other Indigenous people from elsewhere in the world shared their stories with the family, and talked about their struggles in accessing justice as well, she said.  

“This isn’t just a Saskatchewan issue. This isn’t just a Canadian issue. This is a human rights issue,” Tootoosis said, adding everyone should have the right not to be discriminated against based on their skin colour or background.

“This is about Colten and it’s about so much more at the same time because too many — too many — families have experienced what we’ve experienced — [it’s] unacceptable on a global scale as well.”

Why sending the U.S. spy chief to meet Kim Jong-un was a ‘savvy’ move by Trump

It’s probably the clearest indication yet that U.S. President Donald Trump’s unconventional diplomatic approach toward North Korea might be working to achieve his desired “peace through strength.” It’s also a blaring warning that the North is more dangerous than ever, confident it now has the long-range nuclear goods to strike the continental United States.

The revelation that CIA chief Mike Pompeo met secretly last week with Kim Jong-un represents a diplomatic seesaw of sorts for foreign policy observers, delivering both relief and anxiety.

Trump confirmed that Pompeo, the director of the Central Intelligence Agency, met secretly with Kim to lay the groundwork for historic face-to-face talks between the leaders of the two nuclear-armed powers.

The high-level co-operation from the hermit kingdom looks to be a promising step — one that experts say should be tempered with the startling conclusion that Defence Secretary James Mattis made in November.

Pyongyang, Mattis told reporters, has the ability to “threaten everywhere in the world” with its nukes.

It’s in this context that Pompeo met with Kim over the Easter weekend.

This is an unorthodox White House approach — having the American spy service in the driver’s seat for communications with North Korea that might ordinarily be conducted via diplomatic channels.

Trump tweeted that the meeting, which happened while Pompeo was awaiting confirmation from the Senate to become the new secretary of state, “went very smoothly.”

There’s good reason for North Korea to want to keep things that way, amid biting sanctions that the pariah state wants lifted.

“Kim Jong-un now thinks he has a negotiating chip. He has the spectre of saying he can do something. Before, he didn’t have a deliverable nuclear weapon that could hit us,” retired Army Lt.-Col. Dan Davis, who served as a U.S. adviser to the Second Republic of Korea Army, said.

“Now, he’s thinking he’s got something he can actually negotiate with.”

North Korea likely believes it’s operating from a position of strength, or a nuclear “sweet spot,” said Mintaro Oba, a former State Department official in the Obama administration. The regime otherwise wouldn’t have the nerve to pursue such ambitious diplomacy, he said.

“The sweet spot for North Korea,” he said, “is having the ability to attack the U.S. homelands and amp up the threat perception in the United States so that North Korea increases its leverage without actually conducting any sort of offensive attack.”

North Korea tests its intercontinental ballistic rocket Hwasong-15. This undated photo was released by North Korea’s Korean Central News Agency in Pyongyang Nov. 30, 2017. (KCNA/Reuters)

The dramatic advances in North Korea’s nuclear and ballistic missile programs, Oba said, don’t mean they intend to deploy those weapons against the U.S. The North Koreans realize the U.S. nuclear capabilities and conventional military force far exceed theirs, he said.

“It would be committing suicide,” as Davis put it. “They’ve come to a poker game without any face cards. We’ve got a deck of kings, queens and aces — and time is on our side.”

What puts the U.S. in an “unequivocally dominant” bargaining position, he said, is that Kim won’t stomach indefinite negotiations without a deal in the face of tough sanctions impeding his country’s bid for economic modernization.

Trump’s “fire and fury” rhetoric antagonizing North Korea has arguably worked so far, Davis says. The unconventional approach has yielded “healthy developments,” said Stephen Noerper, a former State Department analyst and the senior director of the Korea Society.

Pompeo’s role in the Kim talks furthers the narrative that Trump wants his intelligence community to effectively run diplomatic efforts. Counterintuitive as it may sound, Noerper argues, it’s a shrewd tactic, given how Pyongyang operates, with its national intelligence apparatus outranking its foreign ministry.

“From the North Korean perspective, to have the U.S. send the CIA director makes perfect sense,” he said. “It’s someone [Kim] would see as enjoying the personal support of the president, and having the highest level of security clearance and access to private information.”

If it’s not the way such diplomatic missions are usually conducted, so be it, Noerper said.

“Whether it was intended or not, it was a savvy move.”

In the meantime, North Korea is making predictable diplomatic moves, including having Kim approach China in advance of the talks.

Trump and Japanese Prime Minister Shinzo Abe have also met ahead of an all-important inter-Korean summit, in which North Korea and South Korea are expected to discuss a way to formalize a peace agreement after being technically locked in a 70-year war.

Kim, left, and South Korean Culture Minister Do Jong-whan attend a rare concert by South Korean musicians in Pyongyang on April 1. (AFP/Getty Images)

Pompeo’s trip could confirm that Kim is serious about talks.

Although critics believe the success of Trump’s pressure campaign has been overstated, many also say the positive momentum is hard to deny.

“It’s ill-advised to rely primarily on intelligence channels to conduct diplomacy, and to favour the CIA over the State Department,” said Oba, the former Korea desk officer at State. At the same time, he said, there can be value in employing different channels in dealing with a country as secretive and mercurial as North Korea.

“If one of those channels happens to be the CIA director and North Korean intelligence, and if that’s working,” he said, “then that’s good for us.”

Police arrest mother of 2-year-old found dead in Quebec City

Audrey Gagnon, 23, will appear in a Quebec City courtroom Thursday morning to face charges in connection with the death of her two-year-old daughter.

Police said they are recommending she be charged with murder, though the final decision will be made by Quebec’s director of Criminal and Penal Prosecutions.

The body of Rosalie Gagnon was found near a home on De Gaulle Avenue on Wednesday afternoon, in the city’s Charlesbourg neighbourhood. The toddler was pronounced dead in hospital.

Police said an autopsy will be performed on the girl on Thursday to determine the exact cause of death.

The mother and toddler were reported missing earlier on Wednesday. Police found the woman in an apartment near Gaspard Avenue in the afternoon.

She was with a man at the time. Police said both were interviewed, but the man was eventually released.

The search for the mother and daughter was triggered around 7 a.m. ET Wednesday when someone contacted police after finding an empty baby stroller in Bon-Air Park.

Supreme Court decision on ‘free-the-beer’ case lands today

The Supreme Court of Canada will issue a ruling today on whether Canadians have a constitutional right to buy and transport alcohol across provincial borders without impediments.

The so-called ‘free-the-beer’ case also could have major implications for sales of tobacco and cannabis, and for the supply management system relied upon by Canada’s dairy and egg industries to maintain prices.

The man at the heart of the case is Gerard Comeau, a retired New Brunswick man who, two or three times a year, drives from his home in Tracadie — some 160 kilometres north of Moncton — to Quebec, where it’s cheaper to buy beer and liquor.

In 2012 he was stopped at the New Brunswick-Quebec border by the RCMP and fined $292.50 for having 14 cases of beer, two bottles of whisky and one bottle of liqueur in his vehicle.

You can order a gun from another province and have it delivered to you, but you can’t order a bottle of wine.– Dan Paskowski, president of the Canadian Vintners Association

Most provinces limit how much alcohol people can bring across provincial borders. New Brunswick’s Liquor Control Act sets a limit of 12 pints of beer (about 18 cans or bottles), or one bottle of wine or spirits.

“I’m expecting that the Supreme Court is going to give a decision that’s going to be fair for everybody. I can’t see them saying the province has the right to limit what’s coming into the province from another province,” said Comeau in an interview with CBC News.

Comeau’s argument centres on section 121 of the Constitution Act, which states products from any province “shall … be admitted free into each of the other provinces.”

A 1921 Supreme Court decision interpreted that to mean the products only had to be free from tariffs, not from other barriers such as limits on quantity.

Comeau and others argue that decision offered too narrow an interpretation, and that it led to the proliferation of interprovincial trade barriers.

Gerard Comeau stayed at home in Tracadie, N.B. instead of attending the Supreme Court hearing in Ottawa. (Serge Bouchard/Radio-Canada)

Guns versus wine

One of the 24 intervenors in the case was the Canadian Vintners Association, which has been lobbying for direct-to-consumer wine sales for more than a decade.

“It really is strange that in 2018 you can order a gun from another province and have it delivered to you, but you can’t order a bottle of wine,” said Dan Paskowski, president of the Canadian Vintners Association.

“We are one of the only countries in the world that doesn’t allow wine to be shipped across provincial borders or state borders.”

The number of intervenors in the case is a clear indication of how far-reaching the implications of this case could be. They go far beyond Canadians simply looking to save some money on booze, or to order a hard-to-find Canadian wine.

Provinces — especially those with liquor control boards that operate as alcohol monopolies — rely on alcohol sales for revenue and taxes.

If the Supreme Court rules they can no longer limit imports from provinces with lower prices and taxes, those higher-priced provinces could suffer budget gaps.

Provinces also place limits on the amount of tobacco products Canadians can transport across borders; similar limits could be placed on recreational cannabis when it’s made legal for sale. And since the supply management system places limits on both the production and price of certain agricultural commodities, it’s at risk as well.

“Especially for the governments, financially, there is a lot at stake,” said Comeau’s lawyer Mikael Bernard in an interview with CBC News.

High prices a key deterrent

But others say Canadians’ health is also at stake.

Canadian Cancer Society senior policy analyst Rob Cunningham argues higher prices on alcohol and tobacco deter consumption — and that’s a good thing.

“Provinces should be able to tax harmful products to discourage consumption. We know higher prices have an impact, especially among teenagers,” he said.

But Bernard argues the court should concern itself only with interpreting the Constitution, not the potential “aftermath” of its decision.

“Win, lose or draw, I believe that Mr. Comeau can at least be proud that he opened up a nationwide discussion about the issue,” he said.

For his part, Comeau said he was never aiming to make legal history. He just wants an answer from the court, either way.

“My aim is to find out whether I can shop wherever I want.”

Inflation is back, says Bank of Canada, but it holds off on rate hikes: Don Pittis

Canadian borrowers fearful of another hike in Bank of Canada interest rates are likely off the hook for three months at least.

There is a tiny chance central bank governor Stephen Poloz and his deputy Carolyn Wilkins could raise rates at the next meeting on May 30, but since there is no news conference scheduled to explain their actions, it’s likely the next opportunity to hike won’t be until July.

But the governors made it very clear at yesterday’s meet-the-media session that Canadians must be prepared for a series of future interest rate increases.

“Our uncertainty is about how much and at what pace,” said Poloz.

Housing slowdown

The bank’s research shows housing activity “contracted sharply in the first quarter,” according to the Monetary Policy Report. But Poloz attributes most of that decline to people responding to new, stricter mortgage rules that kicked in Jan. 1 by rushing their plans to buy.A hopeful sign stands at an empty site in East Gwillimbury, Ont. The Bank of Canada says sales will pick up again soon. (Mark Blinch/Reuters)

Effectively, the real estate business that would have happened at the beginning of this year moved to the last few months of 2017 to beat the new stress tests, making the contrast between the two periods even more dramatic.

Poloz says that, and a temporary bottleneck in rail traffic that cut into exports, will begin to disappear from the economic data any time now, causing a sharp return to economic growth.

Bargain rates yield results

Overall yesterday’s report contained good news. For years, bargain-basement interest rates have failed to spark inflation into life, but now there are clear signs the economy is kicking into gear.

Statistics Canada said in March that the annual inflation rate rose to 2.2. per cent in February, from 1.7 the month before.

The pause in rate increases comes while the central bank waits for more data on the future of the economy and inflation. While the bank is confident growth will continue, there are several reasons the pace of that growth remains uncertain.The NAFTA talks are headed by Mexican Economy Minister Ildefonso Guajardo, Canada’s Foreign Minister Chrystia Freeland and U.S. Trade Representative Robert Lighthizer. Uncertainty over the deal has slowed the growth of Canadian economic capacity, Poloz says. (Edgard Garrido/Reuters)

While talk of completing a NAFTA renegotiation with the U.S. and Mexico has become more optimistic in the last month, the bank says there are still signs economic capacity — the ability of Canada to produce goods and services — isn’t increasing as fast as Poloz had hoped. 

Trade uncertainty and confusion over whether U.S. tax cuts would make it better to invest south of the border may have slowed Canadian business investment, not in real terms but compared to what would have happened without those uncertainties.

Rate reaction nightmare?

Bank of Canada researchers also want a better reading on consumer reaction to rising interest rates. Wilkins has said high Canadian household debt levels as interest rates rise keep her awake at night.

The bank says Canadians are beginning to rein in their debt. The difficult question for Wilkins and Poloz is how strongly Canadians will respond to recent rate rises, and perhaps even more unpredictable, how they will respond to the prospect of more increases to come.

According to yesterday’s report, the neutral rate, the interest rate that would neither stimulate nor slow the economy, is between 2.5 and 3.5 per cent, well above the bank’s current 1.5 per cent level.Striking CP Rail workers picket in Coquitlam, B.C., in 2012. Rail workers have again threatened to walk out, and this time they will likely be looking for wage increases to help them catch up with inflation. (Andy Clark/Reuters)

The other thing that the bank wants to research before it makes another move is the Canadian reaction to inflation itself.

After years when prices hardly moved there is a growing perception that prices are rising faster than many people’s wages.

Workers who received annual increments of between one and 1.5 per cent in the past few years are beginning to realize their spending power is dwindling as the prices of their purchases go up by more than two per cent.

Playing catch-up 

“We have noted before that we would expect wages to be growing by around three per cent in an economy operating close to capacity,” said Poloz.

He sounded quite proud that the analysis by his team correctly predicted inflation would hit the midpoint of the bank’s two per cent target about now.

That same team of analysts says inflation will go higher yet, significantly above two per cent in the coming year, but then fall back to two per cent in 2019. They say the economy will still need help from below-trend interest rates.

But for now, as they refrain from using rates to keep a lid on inflation, Poloz and Wilkins will be hoping Canadian businesses planning to raise prices and wage earners hoping to catch up on more than a decade of losses have read the bank’s predictions and will keep singing from the Bank of Canada’s moderate-inflation song book.

Follow Don on Twitter @don_pittis