Bank of Canada‘s oversized cut, Ottawa’s reduced immigration targets and tipping’s effects: Business and investing stories for Oct. 27

Open this photo in gallery:

Getting caught up on a week that got away? Here’s your weekly digest of the Globe’s most essential business and investing stories, with insights and analysis from the pros, stock tips, portfolio strategies and more.

Bank of Canada cuts its key interest rate by a half-point

In a widely expected move, the Bank of Canada lowered the benchmark policy rate by half a percentage-point to 3.75 per cent on Wednesday and said its fight with inflation is almost over. This is the fourth consecutive cut since June and follows three quarter-point moves, Mark Rendell reports. Governor Tiff Macklem said the central bank expects to continue lowering interest rates, but the pace of cuts will depend on incoming economic data. Financial markets expect the policy rate to fall to around 2.5 per cent by the end of next year. The bank’s forecast, also published Wednesday, sees economic activity picking up toward the end of the year and into next year, with falling interest rates expected to spur business investment and consumer spending.

Ottawa to cut immigration targets in a major policy reversal

Earlier this week, the federal government announced that it will slash its immigration targets. Prime Minister Justin Trudeau and Immigration Minister Marc Miller unveiled plans to reduce permanent resident numbers from 500,000 to 395,000 in 2025 and from 500,000 to 380,000 in 2026, Marie Woolf reports. Ottawa also released a plan to address the rise in the number of temporary residents, including international students and people here on work permits, publishing annual targets for the first time. Mr. Trudeau said, after the pandemic, the government “didn’t get the balance quite right” between addressing labour needs and maintaining population growth. He said the changes are aimed at “making our immigration system work better.”

Open this photo in gallery:

Canadian stocks are historically cheap compared with U.S. equities

It seems that Canadian stocks are a bargain in comparison to U.S. stocks, according to any number of valuation metrics. The cyclically adjusted price-to-earnings (CAPE) ratio, which takes a longer view of stock performance over the economic cycle, shows that U.S. equities have rarely been as pricey as they are today. For example, the elevated CAPE ratio of 36.6 suggests there’s limited upside for U.S. shares in the coming years. Meanwhile, the CAPE ratio for Canadian stocks was 24 in September – about equal to the previous 20-year average, according to figures from the research team at Barclays PLC. In this week’s Decoder, Matt Lundy looks at why the numbers between Canada and the U.S. are so vastly different.

Police probing possible arson at three GFL-linked sites months before executives’ houses were shot at

Police are probing suspected arson at three different Ontario locations tied to waste-management giant GFL Environmental Inc. and sister company Green Infrastructure Partners this summer, Robyn Doolittle and Tim Kiladze report. In each alleged arson incident, cube vans, dump trucks or heavy machinery were set on fire. Three different Ontario police services are investigating. The suspected arson happened months before shots were fired at the homes of two company executives at the beginning of October. GFL, which is traded on the Toronto Stock Exchange and the New York Stock Exchange, is a serial acquirer of smaller rivals and has become one of the four largest waste management companies in Canada.

Harris’s and Trump’s visions for the U.S. economy, analyzed in 12 charts

There are two weeks remaining until the U.S. presidential election and the latest poll finds that Kamala Harris and Donald Trump are locked in a dead heat for the popular vote. There is also so much going right in the world‘s largest economy. The U.S. unemployment rate sits at roughly 4 per cent, the stock market is riding a lengthy bull run and the country is growing so quickly that it‘s leaving peer countries in its wake. Still, Americans are feeling glum about the state of affairs. That’s why Matt Lundy, Jason Kirby and Mark Rendell decided to analyze Ms. Harris’s and Mr. Trump’s visions for the U.S. economy through 12 charts, focusing on a handful of topics, from jobs and immigration to affordability and wealth.

Open this photo in gallery:

Inflation is improving, but pervasive tipping makes Canadians feel otherwise

Canada’s inflation rate is back below 2 per cent and the Bank of Canada recently said the fight with inflation is almost over, yet many Canadians believe inflation is still rampant. Why is that the case? Tipping practices, Jason Kirby reports. The onslaught of requests consumers now face for tips – both the shock of being prompted for sky-high tips at some payment terminals, and the request for tips from businesses that never expected gratuities in the past – is fuelling the perception. The surge in inflation that began in early 2022 and the expansion of tipping were each born out of the chaos wrought by the pandemic. And while inflation has largely gone away, tip-flation is proving harder to undo.

Get the rest of the questions from the weekly business and investing news quiz here, and prepare for the week ahead with The Globe’s investing calendar.