Metro Vancouver businesses grapple with industrial market vacancy rates

Joanne Lee-Young
The Vancouver Sun

They are looking out as far as two years in advance of leases expiring, and more are pre-leasing or purchasing pre-sale industrial strata units.

 Construction site in Campbell Heights in Surrey on June 6, 2022. Mike Bell/PNG

The vacancy rate for industrial land in Metro Vancouver has been shrinking since the pandemic began, and the scarcity in the market is now one of the most challenging in the country.

 

Small- and medium-sized businesses will have to plan accordingly to prevent being pushed out of the market, which will chase cheaper rents even further away.

“They are having to change their habits,” said Garth White, an executive with Avison Young in Vancouver.

Instead of shopping for spaces a few months or half a year before leases expire, businesses are being advised to look out two years in advance. Many more of them are pre-leasing or purchasing pre-sales to secure industrial space that is closer to the port, as well as to employees and customers, said White.

“You are seeing a lot of groups purchase their own facilities to control their cost structure so they are not at the whims of the leasing market and their landlord.”

Several developers have been selling stacked or vertical industrial spaces, which gives business owners a way to assign a fixed real estate cost to their plans.

“We’ve got 600-sq.-ft. units, and we’re finding some businesses are buying five or six of these units,” said Brennan Finley, the senior development manager at Wesbild, which is selling units in a six-storey, mixed-use industrial development in South Vancouver called Marine Landing. “They might use a few and lease out the other two, and eventually, as their business grows, they take that space back. That has probably been the number-one trend.”

Rising interest rates have tempered interest from the 30 per cent of the buyers who were investors, but the market is still 70 per cent comprised of businesses wanting to buy and use these spaces themselves, either immediately or later, said Finley.

Over the first quarter of 2022, sales and leasing volume exceeded the $500-million mark, according to Avison Young. Active interest has primarily come from large consumer goods distribution companies such as Wayfair and Amazon.

This happened as the vacancy rate for the Metro Vancouver industrial market stayed at a very low 0.5 per cent from the last quarter of 2021 through to the first of 2022. To compare, the most current vacancy rates tracked by Avison Young for Toronto is higher at 0.9 per cent. In Montreal, it is 1.3 per cent. In Calgary, it is 3.3 per cent, and in Edmonton, it is 4.7 per cent.

Most analysts in the industry point to severe land constraints in Metro Vancouver. White said that even though vertical industrial developments will give some businesses an option, it remains one of the more challenging kinds of property to easily densify in a significant enough way to have impact on the overall tightness of the market.

“There are no easy answers,” said Jason Kiselbach, managing director at commercial real estate firm CBRE. “It definitely puts in a limiting factor on opportunities for growth and expansion and things like that. What we’re hearing is businesses are kind of just taking what they can get.”

[email protected]

 

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© 2022 Vancouver Sun

Push is on to hike costs for Vancouver developers wanting to convert SROs

Sarah Grochowski
The Vancouver Sun

Councillor Jean Swanson is proposing a bylaw change that would bill developers more than $500,000 for each unit of social housing they convert, alter or demolish

 Demolition of the Winters Hotel, destroyed during a fire April 11, was halted after two bodies were found in the rubble. Photo by Jason Payne /PNG

Single-room rentals, which Vancouver uses to house people at risk of homelessness, are disappearing at what advocates say is an alarming rate as hot demand for housing leads to more Downtown Eastside hotels sold for redevelopment.

One city councillor is seeking to halt the trend by forcing developers of single-room occupancy buildings, which house close to 7,000 Vancouver residents, to pay more to replace the rooms they take out of the low-income market.

In a motion going before council on June 7, Coun. Jean Swanson is proposing a bylaw change that would bill developers more than $500,000 for each unit of social housing they convert, alter or demolish, instead of a current $230,000 fee.

Costs to replace social housing downtown have “increased significantly” above the existing rate, Swanson says, which was implemented when the single-room accommodation bylaw went into effect in 2003.

Aging SRO buildings, which historically served as dorm-type accommodations for loggers, fishermen and miners looking for a place in town to crash for a few nights, are now a “necessary housing of last resort,” according to a 2020 city report.

The need for low-cost housing was underscored by the April fire that displaced 71 residents of Gastown’s Winters Hotel, which Atira Property Management operated as supportive housing with funds from B.C. Housing.

Diana Dawkins, a resident for five years, was able to rent her first-floor room at Winters using her $600-a-month Old Age Security pension allowance.

When fire swept through the century-old hotel on April 11, she lost all of her belongings and is now living at Atira’s Sorella Housing for Women, paying $675 a month for rent.

“I feel helpless,” she said. “I have no furniture, nothing to show for being 67 years old. Not even a family picture or the jewelry I was planning to hand down to my children.”

Along with the Winters renters, 79 residents at the adjacent SRO, the Gastown Hotel, were displaced for weeks after the blaze.

Swanson’s motion is seeking clarity from city staff as to whether the bylaw conversion fee applies to hotels destroyed by fire. If it doesn’t, she is asking for it to be included, to prevent further SRO loss in cases similar to the one at Winters.

“We typically lose three to four SRO hotels in a year in the Downtown Eastside,” said housing advocate Wendy Pedersen. “However, in the past few months, we’ve lost four alone.”

“Hundreds of people have been dumped out on the streets with nowhere for them to go. The single-room vacancy rate is now close to zero.”

Another SRO hotel, the Cobalt Hotel at 917 Main St., is in the process of being sold to a hotelier, according to Swanson’s motion. The purchase will mean its current residents will need new homes once the conversion begins.

 

After the city set limits in November on how much landlords of SRO hotels can increase the monthly rent of rooms, two other low-cost downtown hotels — the Lucky Lodge and Vogue — collectively emptied hundreds of tenants back onto the streets.

The vacancy rate of private SRO hotels in Vancouver’s downtown core dropped to four per cent in 2015 from 14 per cent in 1992, according to the city’s latest survey of single-room accommodations.

However, the rent of units continues to increase. The number of SRO rooms renting for more than $450 tripled to 41 per cent of all rooms in 2015 from 14 per cent in 2009.

Swanson submitted a draft of the motion to the mayor and council last month but has since modified it to recommend that city staff “look into” making the changes to the single-room accommodation bylaw as opposed to “implementing it.”

When asked why, the councillor told Postmedia, “One is possible, the other isn’t.”

— with files from Dan Fumano

[email protected]

 

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© 2022 Vancouver Sun

Ranking: These Metro Vancouver cities saw biggest real estate price dips due to rising interest rates

Kendra Mangione
The Province

A just-released report on rising interest rates is giving would-be home buyers and sellers an idea of the impact already being seen in the Vancouver area, and the results vary by city.
Brokers with HouseSigma say the those involved in the local real estate market are seeing price dips, longer listing periods and some homes not selling at all.
In a report Thursday, the company said the median sale price in the Vancouver area overall dipped to $922,000 in May.
That’s a 12.11 per cent decrease from what sellers were getting for their homes back in February ($1,049,000).
HouseSigma blames the Bank of Canada’s overnight lending rate, which was recently increased by 0.5 per cent, up to 1.5 per cent.
It’s the third hike this year, following similar moves in March and April. Those behind the report tried to track the impact in the country’s hottest housing market, and found that, although some buyers had already locked in a lower rate at the beginning of the year, the data suggests changes are underway.
Looking at the median sold price in the region overall, it was close to the $1.05-million mark before the rate hikes began.
In March, that median dropped to $980,000, and by April it was $976,000, followed by the dip again in May.

NOT ALL CITIES IMPACTED EQUALLY
According to the June 2 report, some communities saw more of a decrease than others. While the average for the region is a 12.11 per cent decrease, sellers of detached homes in Maple Ridge got nearly 15 per cent less for their houses in May than in February.
New Westminster, too, saw a shift in favour of buyers with a 14.71 per cent change.
Also impacted more than the average were sellers in Surrey, while those in Langley were close to the average.
Port Moody sellers too saw a double-digit decrease, though below average.
“We’re now starting to see the full effect of rising interest rates on buyers and sellers’ habits,” HouseSigma broker Hao Li said in a news release about the report.
“These double digit dips in detached home averages in areas like Surrey and Maple Ridge highlight the pullback that’s happening in B.C.’s market.”
But the data also suggested it’s still good to be a seller in one area: West Vancouver.
In that community, the median sale price was actually up quite a bit from February. Buyers paid a median of $3.52 million, up 13.55 per cent from what they paid in February.

See a larger version of the embedded graphic on HouseSigma’s blog.
HOMES NOT SELLING AT ALL
In addition to what homes are selling for, the report looked at whether they’re selling at all.
Terminated listings, meaning listings that essentially timed out – they haven’t sold during a specified time and have been pulled down – were up a whopping 121 per cent from February.
According to HouseSigma, 2,331 homes fell into this category back then. By March, 3,095 listings were terminated. In April: 3,590. Another 5,141 listings were terminated in May.
Li said there are a few reasons for this, one of which is sellers deciding the offers they got weren’t good enough. They can then choose to pull it down and re-list the property to attract a new set of potential buyers.
Sometimes, too, sellers will remove the property from the market because it’s sat for a while, thinking maybe they’ll try again when conditions change or at a different time of year.
WHAT IT MEANS
According to Li, this suggests a sharp turn from the height of the pandemic when buyers scrambled to find options, “raising prices at a pace we’ve never seen before.”
Now, it looks like buyers don’t feel that rush, and are thinking that they may get a deal or find a better option if they wait, Li said.
“Since the Bank of Canada started raising rates, buyers have steadily taken a more ‘wait-and-see’ approach to buying a home, and sellers have had to adjust their sale price expectations,” Li said.

© 2022  All rights reserved.

Bonnyville 2.1-acre strip retail sells for $4.2 million

Avison Young
Western Investor

Retail strip of 9,327 square feet, leasable, is centrally located and fully leased in Bonnyville, Alberta.

Avison Young, Edmonton, for Western Investor

Property type: Retail

Location: 5401 43 Street, Bonnyville, Alberta

Property size: 9.327 square feet (leasable).

Land size: 94,525.2 square feet

Land size in acres: 2.17 acres

Zoning: C4 (Shopping centre commercial district)

Sale price: $4.23 million

Date of sale: May 16, 2022

Brokerage: Avison Young, Edmonton

Brokers: Daniel Lee, Reed Newnham and James Robertson

 

© 2022 Western Investor

Metro Vancouver house prices cut as sales dip, listings increase

Frank O’Brien
Western Investor

‘Calming market’ in May spooks some home sellers as transactions fall, listings rise and asking prices start to slide
3831 Royalmore Avenue, Richmond: detached house was listed in May at $1,798,000; on June 1 the asking price was reduced to $1,599,800. | REW.ca
May housing sales across Greater Vancouver fell for the second straight month and asking prices are being cut as month-to-month benchmark prices have dipped for the first time in at least two years.
Total May housing sales reached 2,918, down 31.6 per cent from May of 2021 and down 9.7 per cent from April of this year, reports the Real Estate Board of Greater Vancouver (REBGV).
April sales were down 25 per cent from March 2022, which had set a monthly transactions record.
While the board’s benchmark composite price index shows a modest 0.3 per cent drop from April, the raw average price of a Greater Vancouver home in May was down $65,000 from the peak high in February, to $1,279,785, according to data provided by Dexter Associates, a veteran Vancouver real estate agency.
The median sold price in Greater Vancouver for May stands at $922,000, down 12 per cent from the February peak, and falling below the $1 million level for the third month in a row.
“With interest rates rising, home buyers are taking more time to make their decisions in today’s housing market,” said Daniel John, REBGV Chair. “Home buyers have been operating in a frenzied environment for much of the past two years.”
John described the current market as “calming” but that may not reflect the attitude of some home sellers, especially in the suburbs.
“There is panic in the market,” said Kevin Skipworth, a partner and managing broker at Dexter Associates, “But there shouldn’t be.”
Skipworth noted that after other sudden sales and prices slides – in 2008, 2016 and 2018 – the Metro Vancouver market recovered quickly.
 “There will always be troughs and peaks, that’s what markets do,” he said.
Still the slump in May sales was before the latest increase in the Bank of Canada rate on June 1, which raised the bellwether overnight lending rate 50 basis points to 1.5 per cent, the highest since pre-pandemic days.
Also, the mandatory mortgage stress test increased on June 1 to 5.25 per cent, or 2 per cent above the posted five-year mortgage rate, whichever is higher.
Some sellers are cutting asking prices in a more competitive market that saw the number of homes listed for sale shoot up 13.8 per cent from a month earlier to 10,010 units in May.
In Richmond, where the May benchmark price of a detached house fell 0.4 per cent from April, there have been several price reductions in the first week of June, according to REW.ca, the giant Glacier Media real estate portal, which provided some examples.
A three-bedroom house at 3831 Royalmore Avenue, Richmond was listed at $1,798,000 on May 26. On June 2 the asking price was reduced to $1,599,900. A Richmond condominium apartment at 4111 Bayview Street also saw a week-to-week priced reduction of $200,000 to $1,299,800.
According to House Sigma, a real estate portal that tracked Metro Vancouver median detached house price changes from the February peak, prices in New Westminster, Port Moody, Maple Ridge and Surrey were all at least 14 per cent lower as of May. City of Vancouver median detached house prices, in comparison, are only 0.4 per cent below February, at $2.49 million.  
Hao Li, a broker with House Sigma, said many potential home buyers inked a pre-approved mortgage before the Bank of Canada began raising rates in February. Those 60- to 90-day approvals are running out, he said.
“We’re now starting to see the full effect of rising interest rates on buyers and sellers’ habits,” said Li. “Double-digit dips in detached home averages in areas like Surrey and Maple Ridge highlight the pullback that’s happening in B.C.’s market.”

© 2022 Western Investor

BMO says rapid rise in interest rates forces Canadian housing market into “full retreat”

Carlito Pablo
The Georgia Straight

 The chief economist of BMO seems to suggest that the Canadian housing market is currently on shaky grounds.

Douglas Porter brought up the notion as part of a broader take about the economies in the U.S. and Canada.

Porter’s post Friday (June 3) came a couple of days after the Bank of Canada increased its interest-setting rate by 0.5 percent, which brought the level to 1.5 percent.

This was the third time that the BoC hiked its rate this year, and it’s not done yet.

In its announcement Wednesday (June 1), the central bank indicated that “interest rates will need to rise further”.

Based on Porter’s piece, this situation doesn’t bode well for the Canadian housing market.

“The rapid rate rise is a clear and present danger to the teetering housing market,” Porter wrote.

Porter noted that “early results from major Canadian cities for May vividly show that conditions are cooling in real time”.

The BMO economist stated that sales in Toronto “tumbled” 38.8 percent year-over-year in May 2022.

In Greater Vancouver, he noted that sales fell 32 percent on an annual basis.

In a June 2, 2022 report, the real-estate board for Greater Vancouver stated that sales declined 31.6 percent compared to May 2021.

As well, May 2022 sales marked a 9.7 percent decrease from the number of homes sold in April 2022.

Over at the Fraser Valley, sales in May dropped 53.9 percent compared to the same month in 2021.

In comparison to sales in April 2022, transactions last month represented a 16.9 percent decline.

The Canadian Real Estate Association has yet to release numbers on a national level.

Porter wrote: “The pullback in sales has now gone far beyond simply reversing the outsized strength a year ago, and is now in well-below-average terrain, with inventories building quickly.” (We can’t help but wonder how loud the cries for ‘more supply’ will be in the months ahead amid fading sales and swelling listings.)”

The BMO economist continued: “The full retreat now underway in housing and the threat of an even more hawkish BoC has also prompted a downgrade of the Canadian growth outlook.”

In their respective reports June 2, the real-estate boards of Greater Vancouver and the Fraser Valley indicated that home prices in May 2022 dropped compared to April.

The boards attributed the fall in sales to rising interest rates.

 

 

© 2022 VANCOUVER FREE PRESS.

Contractors sued for “deficient” work on Kelowna tower

Nicholas Johansen
Western Investor

High-rise suffered from shoddy drywall and railing work, claims developer of 14-storey, 91-unt Ellis Park residential tower

 Ellis Park in downtown Kelowna was completed in 2020. | Nicholas Johansen

The developer of a 14-storey residential tower on the corner of Ellis Street and Clement Avenue in downtown Kelowna, B.C. ran into issues with some of the local contractors they used, according to recent court filings.

In civil lawsuits filed in early June, GSL Communities (Ellis) Limited Partnership allege their drywall and railing contractors performed shoddy work on the Ellis Parc building, leaving the developer to pick up the costs of fixing the issues.

Construction of Ellis Parc began in 2018 and it was completed in 2020. It’s one of several towers that have gone up in Kelowna’s core in recent years as city council looks to increase density in the area.

GSL had agreed to pay Kelowna’s Tri-City Dryco more than $3.1 million to perform various drywalling and ceiling work in the newly constructed building. GSL had also entered into a contract with Kelowna’s JK Glass in the amount of $357,440, to install balcony railings, gates, handrails, interior mirrors and exterior and interior glazing in the building.

GSL alleges both companies’ work contained “numerous defects and deficiencies,” which left GSL with the bill to complete the work and repair the “deficiencies.” GSL also claims it suffered “increased costs caused by delays.”

Tri-City’s alleged deficiencies included cracking in the drywall and ceilings, incomplete walls, bulkheads and ceilings, missing drywall, bowed walls, punctured walls, visible drywall joints and more.

On June 26, 2020, after GSL says Tri-City took no steps to address the issues, GSL terminated its contract with Tri-City. GSL says they had already paid Tri-City about $2.975 million when they terminated the contract.

GSL claimed in a separate court filing in September 2020 that they had spent close to $150,000 addressing Tri-City’s alleged deficiencies, and they expected to spend another $25,000-$40,0000 to finish the work.

GSL also terminated its contract with JK Glass, on Sept. 3, 2020. GSL claims JK Glass’ work included improper, unfinished and missing welds, improper loading requirements and “work completed without proper welding certificates.”

In both cases, GSL is seeking general damages for breach of contract, along with interest and the costs of the legal action.

None of GSL’s allegations have been proven in court, and neither JK Glass nor Tri-City Dryco have filed responses to GSL’s notices of civil claim yet.

Ellis Parc contains 91 units, and one-bedroom apartments in the building began at $568,500 when they first went on sale.

 

© 2022 Western Investor

More Balanced Market Providing Buyers with Negotiating Power: TRREB

Patti Cosgarea
other

 The month of May saw a dip in sales on a monthly and annual basis as buyers and sellers alike eagerly awaited Bank of Canada’s announcement, in which it reported its new rate of 1.5%, an increase of 50 basis points. 

• Read: Top Real Estate Terms You Need to Know as a Home Buyer or Seller

Although there was a decrease in sales overall, active listings at the end of the month were up on a month-over-month and annual basis, signaling more balanced market conditions for buyers. The number of active listings increased by 26 per cent on a year-over-year basis. ”Bank of Canada rate hikes, including the 50-basis point hike on June 1, are impacting home buyers in the short term. There is now a psychological aspect where potential buyers are waiting for a bottom in price. This will likely continue through the summer” said TRREB President Kevin Crigger. “However, as home buyers adjust to higher borrowing costs, housing demand will be supported by extremely low unemployment, high job vacancies, rising incomes and record immigration,” he continued. 

This means that we are still expecting to see a strong market this summer with more room for buyers to negotiate sale prices and include conditions on offers. Something that was almost unheard of this time last year. 

Average Selling Price Settling and Detached and Condo Apartments are in High Demand 

Market conditions are still strong and the average selling price in May was $1,212,806, an annual growth rate of 9.4 per cent. However, we are seeing prices stabilize from the month-over-month growth rates in Q1. Prices in Toronto and the GTA are down versus April once again by -3.3%. Some key markets that saw large price drops month-over-month include: Oakville, which saw an average price drop of -11.6%; Orangeville, which decreased -8% month-over-month; and Oshawa, down by 10% from April to May .

With low unemployment and immigration getting back to pre-pandemic levels, demand is still high.  In Toronto and the GTA, the demand for detached homes and condo apartments are leading the pack. The GTA saw 2,552 sales of detached homes with an average price of $1,432,951. This is up 7.8% year-over-year, but down -6.1% month-over-month. In Toronto, with people heading back to offices and the downtown core, it’s no surprise that condo apartments are the most in demand, with 1,264 sales last month. The average price of a condo in the ‘416’ hit $793,124. While this is an increase of 10.5% year-over-year; the price has come down by -3.4% since April. Townhouses were the third most in demand home type, with a combined 1,251 total sales in Toronto and the GTA and an average price of $977,194. 

• Read: The Most Viewed Homes in April 2022

Whether you’re buying, selling, or both, the more balanced market conditions indicate that we can expect a likely slower but more fair market this summer versus 2021. Sellers should be prepared to negotiate with buyers and work with their real estate agent to properly position their home in today’s climate. More balance means more buyers may be able to enter the market but they will come with conditions to their agreements. Conditions that this red-hot GTA market hasn’t seen in over two years!

  

© 2015 – 2022 Zoocasa Realty Inc., Brokerage

Alberta 38-pad manufactured home park trades at $2.3 million

Avison Young
Western Investor

Kalmac Mobile Home Park sits on a 5.5-acre site in Millet, Alberta, which is about 40 kilometres south of Edmonton

Property type: Manufactured home park (Multi-family)

Location: 7-46 Kalmac (44^th) Avenue, Millet, Alberta

Number of pads: 38

Land size:239,580 square feet

Land size in acres: 5.5 acre (approx,)

Zoning: C1 (Downtown commercial district)

Sale price: $2.3 million

Date of sale: April 13, 2022

Brokerage: Avison Young, Edmonton

Brokers: Reed Newnham and James Robertson

 

© 2022 Western Investor

‘Aggressive’ BoC could be readying even larger rate hikes, says CIBC economist

Fergal McAlinden
other

“You cannot just talk yourself to lower inflation… You have to demonstrate that you’re very serious”

 The Bank of Canada could be laying the groundwork for even larger rate hikes than the 50-basis-point increases of its last two policy rate announcements, according to a prominent economist.

Benjamin Tal (pictured top), deputy chief economist at CIBC World Markets, told Canadian Mortgage Professional that the content of the Bank’s latest statement suggested that it was considering a 0.75% hike in July to tackle an inflation crisis that shows little sign of slowing.

In Wednesday’s announcement, which saw a third consecutive hike to bring the benchmark rate to 1.5%, the central bank reiterated that rates must rise further and said it was prepared to act “more forcefully if needed” to get inflation under control.

“They used language that suggests, and I think the market will start pricing it in, that maybe they will go in 75-basis-point [increases],” Tal said. “The market is trying to figure out what it means. I still believe that we might go 0.5% [higher] at the next move, but I would not be surprised if the market was toying with the idea that the next move will actually be 0.75%.

“The Bank of Canada in its language clearly opens the door for this kind of interpretation. So we’re talking about a very aggressive Bank that means business – no question about it.”

The central bank slashed its trendsetting rate to a rock-bottom 0.25% as the COVID-19 pandemic took hold in March 2020, keeping that rate steady for nearly two years before announcing a quarter-percentage-point increase in March this year.

It’s introduced two so-called “oversized” rate hikes of a half point each since then as it grapples with inflation that’s ballooned to its highest level in over three decades, with the Bank signalling further concern on that issue in its latest announcement.

Read more: Bank of Canada announces another oversized rate hike

Consumer price index inflation of 6.8% remains well above the Bank’s forecast – and will likely spiral higher in the near term, according to the central bank, as “the risk of elevated inflation becoming entrenched has risen.”

Tal said the Bank’s view that inflation will continue to accelerate came as something of a surprise, especially since the market seemed to be considering the idea that it had peaked.

“The Bank is clearly worried about inflation expectations and the risk that… elevated inflation would be the norm,” he said. “That’s the nightmare as far as the Bank of Canada is concerned.”

Governor Tiff Macklem has already admitted missteps on the inflation issue, telling the Senate banking committee at the end of April that the central bank was still “adjusting” after coming out of the deepest recession in Canadian history. “We got a lot of things right,” he said. “We got some things wrong.”

Macklem and other Bank of Canada representatives, including deputy governor Toni Gravelle, had telegraphed their intention to implement another oversized hike long before its June announcement, with that move already long anticipated by market observers.  

Read next: A Canada housing crash? Don’t count on it, says RBC economist

The central bank is facing something of a “credibility issue,” according to Tal, particularly when it comes to making sure it isn’t behind the curve on inflation.

The future of energy prices is also likely to be weighing heavily on the Bank’s mind, he added, especially after recent news that the European Union is planning to ban 90% of Russian oil imports by the end of the year.

In its announcement, the Bank said Russia’s ongoing invasion of Ukraine, COVID lockdowns in China and supply disruptions were negatively impacting activity and boosting inflation, with the war putting upward pressure on energy and agricultural commodity prices.

Those factors arrive amidst “strong” domestic economic activity, the Bank said, as job vacancies remain elevated and wage growth begins to gather pace across various sectors – pointing to likely solid growth in the second quarter of the year.

“Clearly the Russia situation complicated the picture with oil prices rising, so there are a few things that [the Bank] didn’t predict and… they are stuck with inflation that is higher than they expected. Therefore, they project that higher interest rate [increases] will have to be more forceful,” Tal said.

“You cannot just talk yourself to lower inflation. You have to do something – you have to demonstrate that you’re very serious. And that’s exactly what they’re doing, not only with their action but also with their language.”

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