Let it Fail? Reflections on the SVB Collapse and the US and Canadian Approaches to Bank Crises
Despite having highly similar economies, in banking the experience of the crisis-prone United States contrasts starkly with Canada’s stability. For each major US crisis, different reasons have been put forward to explain Canada’s comparative stability in the face of broadly similar shocks, an issue that arose again in the context of the failure of […] Despite the Bank of Canada’s continued tough talk, rate cuts are coming – Globe and Mail
The Bank of Canada surprised no one by holding its target for the overnight lending rate at 5 per cent on Wednesday. Last week’s releases by Statistics Canada showing a decline in third-quarter GDP and an uptick in the unemployment rate sealed the deal.
Nevertheless, the announcement made it clear that the bank is not satisfied with the pace at which inflation is falling, stressed that the fight against inflation is not yet won, and stated that they stand ready to boost rates again if inflation numbers disappoint.
It’s clear that the bank is concerned about inflation expectations becoming de-anchored from the 2-per-cent target. They continue to prioritize re-establishing any…
C.D. Howe Institute Monetary Policy Council to Bank of Canada: Hold Overnight Rate at 5.00 Percent until January, Cut to 4.00 Percent by End of 2024
November 30, 2023 – The C.D. Howe Institute’s Monetary Policy Council (MPC) recommends that the Bank of Canada maintain its target for the overnight rate, its benchmark policy interest rate, at 5.00 percent at its next announcement on December 6th. The MPC further recommends that the Bank keep the target at 5.00 percent in January 2024, before reducing it to 4.75 percent by June of 2024 and to 4.00 percent by December of 2024.
The MPC provides an independent assessment of the monetary stance consistent with the Bank of Canada’s 2 percent inflation target. William Robson, the Institute’s CEO, chairs the Council. Council members make recommendations for the Bank of Canada’s upcoming interest-rate announcement, the…
November 15, 2023: Domestic Stability Buffer Council Recommends Holding Buffer at 3.5 Percent at Inaugural Meeting
At its inaugural meeting, the C.D. Howe Institute’s Domestic Stability Buffer Council (DSBC) recommended that the Office of the Superintendent of Financial Institutions (OSFI) maintain its Domestic Stability Buffer (DSB) at 3.5 percent at its next setting in December.
The DSBC provides OSFI, industry participants, and key economic policy voices with an independent assessment of the appropriate size of the buffer in pursuit of OSFI’s mandate of contributing to public confidence in the Canadian financial system. The Council consists of Vivian Abdelmessih, Cathy Cranston, Jamey Hubbs, Peter Levitt, Duncan Munn, Mark Zelmer, and Jeremy Kronick who is Chair. Council members make recommendations for OSFI’s upcoming DSB…
Supply Side Factors are Driving Remaining Inflation in Canada
November 15 – Trevor Tombe, professor of economics at the University of Calgary, and a co-author of a new C.D. Howe Institute report on key drivers of inflation in Canada, tells BNN Bloomberg that the drop in inflation over the past year was driven by falling energy prices. He says persisting inflation is being led by supply side factors such as pricing strategies, production costs and supply chain problems, and that the Bank of Canada may have to continue its tight monetary stance to counter the upward push of these factors against the downward push on demand created by its interest rate hikes. He also says wages and labour costs have not been significant contributors to either inflation’s rise or fall.
Duncan Munn – The Evil of Short-Termism Bedevils Canada’s Future
From: Duncan Munn To: Concerned Canadians Date: October 30, 2023 Re: The Evil of Short-Termism Bedevils Canada’s Future Canada has long been celebrated for its political stability, economic resilience, and social cohesion. Beneath this seemingly idyllic surface, however, lies a pervasive and destructive force: Short-termism. It has infiltrated the public and private sector, jeopardizing living standards. As we […] Napas Thein – Canada Needs its Own AI Regulatory Framework
This week, we present the three top finishers in the C.D. Howe Institute Intelligence Memo competition, which was open to graduate students across the country. Today, our first runner-up. From: Napas Thein To: The Honourable François-Philippe Champagne, Minister of Innovation, Science and Economic Development Date: October 26, 2023 Re: Canada Needs its Own AI Regulatory […] Beyond tightening, where is the end point of the Bank of Canada’s monetary policy? – Globe and Mail
The Bank of Canada once again held its policy rate at 5 per cent on Wednesday, as expected.
After two months of disappointment, with the annual change in the Consumer Price Index ticking up in July and August, inflation resumed its descent in September, falling to 3.8 per cent from 4 per cent. That, plus weak economic numbers, made it practically certain – confirmed by the expectations of financial markets – that the central bank would hold.
The real questions concern the bank’s end point for monetary policy in the medium term and what that means for Canadians.
The bank is probably at the end of its tightening cycle. But this doesn’t mean interest rates are coming back down to where they were before…
Balance of data shows rate hikes are starting to work: C.D. Howe’s Jeremy Kronick
Jeremy Kronick, Associate Vice President and Director of the Centre on Financial and Monetary Policy at the C.D. Howe Institute, tells BNN Bloomberg that the Bank of Canada should hold rates at their current level tomorrow, but there’s also a chance they might hike again in this tightening cycle. He points to the job market and wage growth as areas of concern. Colin Busby – RRSP or TFSA? Canadians Need Help to Make the Call
From: Colin Busby To: Retirement savings observers Date: September 25, 2023 Re: RRSP or TFSA? Canadians Need Help to Make the Call A successful savings plan is the product of both how much is saved and the returns on those savings, which one could call saving efficiency. This second aspect of savings decisions is often […] Kronick, Robson – Easy Populist Targets Lead to Bad Policy
From: Jeremy M. Kronick and William B.P. Robson To: Finance Ministers and Critics Date: September 19, 2023 Re: Easy Populist Targets Lead to Bad Policy In public policy, as in life generally, we often recognize mistakes by others more easily than we recognize mistakes we make ourselves. Italy just goofed big-time with a windfall tax on its banks, and […] Glen Hodgson – Fires and Floods: It’s Time for Some Insurance Plans
From: Glen Hodgson To: Canadian Climate Watchers Date: September 11, 2023 Re: Fires and Floods: It’s Time for Some Insurance Plans Fires, floods and severe storms have hit across the country, with climate change the probable cause. These severe events have destroyed housing, commercial property and infrastructure with a lengthy recovery period ahead. Insured and uninsured losses will […]