Economic showdown this week will set the tone for 2022

For the many Canadians who watch the economy the way some people watched the battle that led to Sunday's Grey Cup, this is an exciting week.

In a rush to get business completed before the year ends, Canada's finance minister, Chrystia Freeland, kicks off an economic blitz.

On Monday, she outlined the federal government's new relationship with the Bank of Canada. And on Tuesday afternoon, she presents a fractured Parliament with her outlook for the economy and for spending in the coming year.

But that's not all that awaits economy devotees. Also this week, due to an accident of the calendar, Wednesday will offer a new set of hotly awaited — and hotly debated — economic data that will also help set the tone for 2022.

Canadian inflation figures are out and face close scrutiny following last week's report of staggering price rises in the United States. Also Wednesday, U.S. Federal Reserve chair Jerome Powell is widely expected to reveal what he is going to do about those rising prices in the coming year, something that will affect Canadians, too.

Not to be left out, the other economic issue that rivals inflation — house prices — gets its final reveal before the new year as the Canadian Real Estate Association (CREA) rolls out its latest data on Canada's pricey market, and the Canada Mortgage and Housing Corporation releases the latest numbers on housing starts.

Two other economic indicators — retail sales and manufacturing orders — are both expected to show the economy remains strong.

While some of us may have had trouble working up much enthusiasm for the weekend wrestling match between the victorious Winnipeg Blue Bombers and the ruffle-furred Hamilton Tiger-Cats, for the economy-minded, the rest of the week will provide not just excitement but fodder for hours of holiday debate.

In some ways, Freeland's first economic item of business this week, creating a new set of rules for the Bank of Canada, was a matter of housekeeping.

Some commentators had feared a delay in announcing the new rules signalled big changes afoot, such as adopting U.S. rules where Congress requires the Federal Reserve to consider equally the inflation rate and unemployment when choosing when to adjust interest rates.

In the event, it seems that a continuing battle with COVID-19 and a parliamentary election were the real reasons for the delay.

"This is not a dual mandate," Freeland said sternly at a Monday news conference with her chief central banker, Tiff Macklem. "We are very explicitly, with this mandate renewal, choosing not to do that."

But the implication of the change — which gives the bank leeway to consider unemployment as well as the inflation target when setting rates — is that Macklem and his team will be permitted to let the economy run a little hotter than it otherwise would if they decide jobs are at stake. Otherwise, there would be no reason for the change of wording.

On Wednesday, Macklem gets an entire news conference of his own to try to explain the subtle differences that the rewording imply.