Bank of Canada’s latest interest rate hike may be one too many – Globe and Mail
On Wednesday, the Bank of Canada increased its policy rate to 5 per cent, a level not seen since March, 2001. Citing continuing tightness in labour markets and still-firm consumer spending, the bank reasoned there is still excess demand in Canada’s economy, and that Wednesday’s rate hike was necessary to continue to bring activity in line with productive potential. But if that adjustment is already happening, this hike may turn out to be one too many.
Among the many challenges a central bank faces in a fight against high inflation is the mixed signals it gets as it hikes rates to get inflation down. In Canada, the year-over-year headline inflation rate fell to 3.4 per cent in May. However, most of that was driven by a fall in…
I’m not convinced the earlier rate hikes have worked their way through: Economist Jeremy Kronick
Jeremy Kronick, director of monetary and financial services research at the C.D. Howe Institute, joins BNN Bloomberg to preview the Bank of Canada’s next rate decision due on Wednesday, and explains why he believes there is no need for further interest rate hikes at this time. Devlin, Forssell – Federal Mortgage-Bond Consolidation Should be a Non-Starter
To: Finance Minister Chrystia Freeland From: Ed Devlin and Anders Forssell Date: June 26, 2023 Re: Federal Mortgage-Bond Consolidation Should be a Non-Starter The federal government intends to engage in market consultations on the potential consolidation of Canada Mortgage Bonds (CMB) within the Government of Canada borrowing program, it said in its last budget. A decision is expected in […] Consumers bring forward spending if they expect continued inflation: C.D. Howe’s Jeremy Kronick
Jeremy Kronick, director of monetary and financial services research at the C.D. Howe Institute, tells BNN Bloomberg that elevated inflation expectations could be a reason for the jump in household spending in today’s Q1 GDP data. He says lower business spending makes him less optimistic about improvement in productivity. On the BoC’s rate meeting next month, he says the central bank may choose to see if future data continues to support tightening before hiking rates again.
Duncan Munn – Toward a Real-Time Framework for Bank Supervision
From: Duncan Munn To: Canada’s Financial System Regulators Date: May 10, 2023 Re: Toward a Real-Time Framework for Bank Supervision Much ink has been spilled over the past few weeks regarding the turmoil in the banking industry following the collapse of Silicon Valley Bank. Now, another regional bank, First Republic Bank has failed after $100 billion of deposits went […] Buyers Beware: The Cost of Barriers to Building Housing in Canadian Cities
Provincial and municipal governments should cut excessive regulations on new housing development projects and lower the upfront costs on homebuyers to help Canadians grapple with skyrocketing housing prices. The author estimates the gap between the marginal cost of construction for new housing and the market price in major Canadian city areas. This gap shows the […] Jeremy Kronick on BNN – Lessons learned from the Bank of Canada and U.S. Federal Reserve’s inflation fight so far
Jeremy Kronick, Director of Monetary and Financial Services Research at the C.D. Howe Institute, recently joined BNN Bloomberg to talk about the lessons learned from the Bank of Canada’s inflation fight and how it differs from the U.S. Federal Reserve.
Jeremy Kronick on BNN – BoC says Inflation, Financial Stress Affecting Rate Plans
Jeremy Kronick, Director of Monetary and Financial Services Research at the C.D. Howe Institute, recently joined BNN Bloomberg to discuss Bank of Canada Governor Tiff Macklem’s speech on balancing inflation with systemic risks.
Kronick, Munn, Zelmer – The Big Questions Surrounding the Future of Deposit Insurance
From: Jeremy M. Kronick, Duncan T. Munn and Mark Zelmer To: Canadian Deposit Insurance Regulators Date: May 1, 2023 Re: The Big Questions Surrounding the Future of Deposit Insurance More than 15 years have passed since the $100,000 deposit insurance limit for eligible deposits at the Big Six banks and a host of other smaller federally regulated deposit-taking institutions […] After SVB’s collapse, what to do about deposit insurance?- Financial Post Op-Ed
It has been 15 years since the $100,000 deposit insurance limit for eligible deposits at the Big Six banks and a host of other smaller federally-regulated deposit-taking institutions came into force. Inflation since then suggests the time has come to raise it. But we may want to think about other changes, too.
Canada has a fragmented deposit insurance system. In addition to the federal system managed by the Canada Deposit Insurance Corp.(CDIC), deposits of provincially incorporated institutions, like most credit unions and caisses populaires, are backed by their respective provincial deposit insurance corporations. Coverage limits in those systems range from $100,000 in Quebec to full coverage in the four western…
Ambler, Kronick – Silver Linings for Canada in the SVB Implosion
From: Steve Ambler and Jeremy Kronick To: Canadian Inflation Watchers Date: April 25, 2023 Re: Silver Linings for Canada in the SVB Implosion The Bank of Canada held its overnight rate, its benchmark policy rate, at 4.5 percent two weeks ago. No surprises there. The data were consistent with the Bank’s view that inflation would come back down to three percent by […] Bafale, Spence – Expanding Competition in the Canadian Banking Sector
To: Canada’s Policymakers From: Mawakina Bafale and Andrew Spence Date: April 24, 2023 Re: Expanding Competition in the Canadian Banking Sector Canada’s recent record on business investment has been jarring in its weakness, with available capital per worker in a sustained decline that undermines the economy’s capacity for productivity growth, innovation and dynamism. This is […]