C.D. Howe Institute Monetary Policy Council Calls for Bank of Canada to Cut Overnight Rate to 3.50 Percent Next Week, 3.00 by Summer, 2.75 Percent in a Year

December 5, 2024 – The C.D. Howe Institute’s Monetary Policy Council (MPC) calls for the Bank of Canada to lower its target for the overnight rate, its benchmark policy interest rate, to 3.50 percent at its next announcement on December 11th. The MPC further calls for the Bank to lower the target to 3.25 percent at the following announcement in January, to 3.00 percent by June of 2025, and to 2.75 percent by December of 2025.

The MPC provides an independent assessment of the monetary stance consistent with the Bank of Canada’s 2 percent inflation target. MPC co-chair Jeremy Kronick, the Institute’s Vice-President, Economic Analysis and Strategy, chaired this meeting. MPC members make recommendations for the Bank of Canada’s…

Council Recommends Keeping Stability Buffer at 3.5 Percent While Urging Major Banks to Stay Prepared

Third Meeting of the C.D. Howe Institute Domestic Stability Buffer Council

At its meeting on November 26th, the C.D. Howe Institute’s Domestic Stability Buffer Council (DSBC) recommended that the Office of the Superintendent of Financial Institutions (OSFI) maintain the Domestic Stability Buffer (DSB) for the domestic systemically important banks (D-SIBs)1 at 3.5 percent at its next setting in December. The DSBC also emphasized the importance of D-SIBs preserving their strong capital positions.

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 Canada’s…

Graph of the Week: Deposit Preferences Shift as Interest Rates Fluctuate

Mark Zelmer – Change is Afoot. Prudential Regulation Must Change

A New Monetary Policy Tool: The Real Neutral Rate Yield Curve for Canada

Barry Gros – Ontario’s New Target Benefit Plan Framework: One Caveat

Jeremy Kronick and Steve Ambler – The Bank of Canada must loosen monetary policy at a faster pace

Published in the Globe and Mail.

The inflation beast is looking considerably weaker. Between the Bank of Canada’s rate announcement on Sept. 4 and its announcement on Wednesday, Statistics Canada released two of its monthly reports on the consumer price index. They showed that headline inflation fell by almost a full percentage point and is now well below target.

For this reason, markets were not surprised by the 50-basis point cut in the Bank of Canada’s overnight rate target. The cut was fully baked into market expectations, and there was even speculation about a supersized cut of 75 basis points.

As it is, the bank has more work to do with its overnight rate. With inflation falling faster than the policy rate,…

Jeremy M. Kronick on BNN Bloomberg – How a 2% interest rate could impact mortgage rates

As Canada stays on track for a 2 percent inflation rate, what could this mean for mortgage rates? Jeremy M. Kronick, Vice-President, Economic Analysis and Strategy at the C.D. Howe Institute, explains.

Jeremy M. Kronick on BNN Bloomberg – Bank of Canada delivers 50 bps rate cut

Jeremy M. Kronick, Vice-President, Economic Analysis and Strategy at the C.D. Howe Institute, joins BNN Bloomberg to talk about The Bank of Canada delivering 50 bps rate cut.

Mark Zelmer – Banking is changing. Bank regulators need to adapt

Published in the Financial Post

Canada has not had a bank failure in over 30 years. But banking is changing, and so bank regulation may need to change, too.

Bank runs can now cripple an institution in a matter of hours, not days. Deposit insurance can no longer be counted on to prevent such runs. And a very different regulatory environment has emerged in the wake of the global financial crisis. Last year’s sudden collapse of Silicon Valley Bank in the U.S. and slower demise of Credit Suisse in Switzerland are examples of crises Canadian regulators might struggle to cope with if something similar happened here.

As banking evolves away from the system that existed in the last century, the risk of bank runs is likely to…

C.D. Howe Institute Monetary Policy Council Calls for Bank of Canada to Cut Overnight Rate to 3.75 Percent Next Week, 3.00 by Spring, 2.50 Percent in a Year

October 17, 2024 – The C.D. Howe Institute’s Monetary Policy Council (MPC) calls for the Bank of Canada to lower its target for the overnight rate, its benchmark policy interest rate, to 3.75 percent at its next announcement on October 23rd. The MPC further calls for the Bank to lower the target to 3.50 percent at the following announcement in December, to 3.00 percent by April of 2025, and to 2.50 percent by October of 2025.

The MPC provides an independent assessment of the monetary stance consistent with the Bank of Canada’s 2 percent inflation target. MPC co-chair William Robson, the Institute’s President and CEO, chaired this meeting. MPC members make recommendations for the Bank of Canada’s target for the overnight rate…

Better Safe than Sorry: Options for Managing Bank Runs in the Future