There’s a way to break inflation without breaking the economy – Financial Post Op-Ed
What triggered the sharp rise in Canadian inflation in spring 2021 is still a matter of debate. And it’s a debate that matters: the relative importance of the pandemic’s disruption of supply chains, Russia’s invasion of Ukraine, “greed,” or central banks’ financing of a surge in government spending will affect our response to future events. But once inflation gets started the initial causes are less important than the process that sustains it, which is a combination, on the one hand, of rising inflation expectations and costs and, on the other, of inadequate production.
When inflation has been low and stable — say two per cent — for some time then everyone knows that everyone knows that inflation will be about two per…
Kronick, Ambler – Slaying the Beast: The Bank of Canada’s Inflation Fight
From: Jeremy M. Kronick and Steve Ambler To: Inflation observers Date: June 6, 2023 Re: Slaying the Beast: The Bank of Canada’s Inflation Fight The surge of inflation as economies recovered from the COVID lockdowns of 2020 and 2021 took central bankers and most other observers by surprise. Canada was no exception. Year-over-year CPI inflation rose from -0.4 […]More hikes likely, the BoC should consider more active QT: Former BoC deputy governor John Murray
John Murray, senior fellow at the C.D. Howe Institute and a former deputy governor at the Bank of Canada, tells BNN Bloomberg, agrees with today’s 25 bps hike and expects more hikes this year as monetary conditions are still not tight in real terms. He also discusses the resilience in the labour and housing markets. BoC could make same mistake as ECB did in 2008 if it hikes rates today: Ed Devlin
Ed Devlin, founder of Devlin Capital, senior fellow at C.D. Howe Institute and former head of Canadian Portfolio Management at PIMCO, joins BNN Bloomberg for his outlook on the BoC upcoming rate announcement. Devlin warns the BoC could make a policy mistake similar to the one committed by the European Central Bank in 2008 if it continues hiking rates. C.D. Howe Institute Monetary Policy Council Calls for Bank of Canada to Hold Overnight Rate at 4.50 Percent through December, Cut to 4.00 Percent by June of 2024
June 1, 2023 – The C.D. Howe Institute’s Monetary Policy Council (MPC) recommends that the Bank of Canada hold its target for the overnight rate, its benchmark policy interest rate, at 4.50 percent on June 7th, and keep it at that level for the next six months. By June of 2024, the Council recommends a cut to 4.00 percent.
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 subsequent announcement, and the announcements six months and one year ahead. The Council’s formal…
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.
Slaying the Beast: The Bank of Canada’s Ongoing Battle with Inflation
The surge of inflation as economies recovered from the COVID lockdowns of 2020 and 2021 took central bankers and most other observers by surprise. Canada was no exception. Year-over-year CPI inflation rose from -0.4 percent at its nadir in May 2020, to a peak of 8.1 percent in June 2022 before finishing 2022 at 6.3 […] Did the U.S. financial crisis make the Bank of Canada’s job easier? – Financial Post Op-Ed
Last week, the Bank of Canada held its overnight rate, its benchmark policy rate, at 4.5 per cent. No surprises there. In its last announcement, the bank told us the data were consistent with their view that, with the target rate where it is, inflation would come back down to three per cent by the middle of this year. Data since have not changed governing council’s view that at present more tightening wasn’t necessary.
In fact, if anything, the major economic development over the last six weeks, the failures of Silicon Valley Bank (SVB) and Signature Bank, as well as the emergency takeover of Credit Suisse by UBS Group AG, made caution even more prudent. Furthermore, it might actually make the…
Are Interest Rates Now High?
The Bank of Canada’s key policy interest rate, the target for the overnight rate, is now 425 basis points higher than in early March 2022 (0.25 to 4.5 percent). The sharp increase has led to a perception interest rates are now high and some puzzlement that has not dampened economic activity more. But are interest […] Don Drummond – It was Hard, but the Bank of Canada was Right to Hold its Course on Interest Rates
From: Don Drummond To: Interest rate observers Date: April 19, 2023 Re: It was Hard, but the Bank of Canada was Right to Hold its Course on Interest Rates At its interest-rate setting on March 8, the Bank of Canada paused its months-long hiking campaign and left unchanged its target for the overnight interest rate at 4.5 percent. Being […]Bank of Canada was right to hold interest rates steady, even if that was difficult – Globe and Mail Op-Ed
At its last interest rate setting on March 8, the Bank of Canada paused its months-long hiking campaign and left unchanged its target for the overnight interest rate at 4.5 per cent. Being on the fence can be uncomfortable in the current inflationary environment – but for the latest rate setting on Wednesday, the bank was right to remain there.
Perching on the fence is uncomfortable for many reasons. First is the long lag time between setting interest rates and seeing the result. It can take 18 months or more for changes in interest rates to affect economic activity and then inflation. The bank’s rate hikes over the past year are moving inflation in the right direction. The year-over-year rate of…