Ambler, Kronick – The Bank of Canada Didn’t Follow the Fed Last Week: A Good Call

C.D. Howe Institute Monetary Policy Council Calls for Bank of Canada to Hold Overnight Rate at 4.50 Percent through September, Cut to 4.25 Percent by March of 2024

March 2, 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 March 8th, and keep it at that level for the next six months. By March of 2024, the Council recommends a cut to 4.25 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…

Ambler, Kronick – Five Reasons the Inflation Worst is Over

Jeremy Kronick on BNN – Explaining the Bank of Canada’s Latest Transparency Experiment

The Bank of Canada released minutes of its January 25 interest rate meeting this week. Our Jeremy Kronick outlined the benefits and risks of this first-ever initiative for a BNN Bloomberg television audience.

The Bank of Canada is right to ease off the brakes and see what happens – Financial Post Op-Ed

The Bank of Canada met market expectations last week by raising its policy rate by 25 basis points, to 4.5 per cent. The bank also changed its tone from hesitant caution to guarded optimism. Its message: Hikes might just be over.

In December, the bank made clear that any further tightening would depend on the data. This time, it stressed that if inflation declines in key sectors to the extent it forecast in its latest Monetary Policy Report, it will hold the policy rate steady and pause to assess the impact of its cumulative rate hikes. A terminal peak of 4.5 per cent would also be in line with the most recent C.D. Howe Institute Monetary Policy Council announcement.

We expect — as most Canadians…

Paul Jenkins – Pathways to Price Stability

Fiscal and Monetary Policy Need to Work Together – Financial Post Op-Ed

Since starting its fight against inflation last March the Bank of Canada has been focused on little else. That is in stark contrast with many of the country’s finance ministers, who have raised spending and increased government hiring. Coordination between our monetary and fiscal authorities would make the Bank’s job a lot easier. Failing that, however, the Bank should continue do what is necessary to get inflation back to target.

The onset of the pandemic saw unprecedented coordination between fiscal and monetary authorities around the globe, including in this country. The Bank of Canada lowered its policy rate to its effective lower bound (0.25 per cent) and then turned to less conventional monetary…

Tombe, Chen – BoC Losses are Just Getting Started. What to Do?

John Murray on BNN – We are Still in Negative Real Interest Rate Territory 

John Murray, Senior Fellow at the C.D. Howe Institute and a former Deputy Governor at the Bank of Canada, tells BNN Bloomberg the Bank of Canada’s guidance following its 25 basis points rate hike was too explicit about prospects for a pause, and that the markets might run with it further than they should. He believes there is still a fair amount of stimulus in the economy and that more interest rate hikes could be needed as year-over-year core inflation is essentially unchanged since last year. He says much of the inflation drop may be due to lower energy prices and supply chain easing, and could prove short-lived.

C.D. Howe Institute Monetary Policy Council Calls for Bank of Canada to Hold Overnight Rate at 4.25 Percent

January 19 – 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 4.25 percent on January 25th. The Council further recommended that the Bank raise the overnight rate target to 4.50 percent at the following announcement in March and hold it there through July before lowering it back to 4.25 percent by January 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…

Looking Ahead with Andrew Coyne

What will 2023 bring for inflation, the housing market and healthcare? In episode one of the C.D. Howe Institute Podcast’s fifth season, the Globe & Mail’s Andrew Coyne joins host Michael Hainsworth for insight into the year ahead.

The Bank of Canada’s millions in balance-sheet losses are only the beginning – Globe and Mail Op-Ed

While the full effects of the Bank of Canada’s rate hikes are not yet known, there is an immediate effect on the central bank’s own finances: growing interest expenses and large financial losses. The bank’s recently released third-quarter financial results showed that for the first time, the bank incurred a net loss: $511-million. This is only the beginning.

This matters, especially at a time of heightened political attention toward monetary-policy issues.

The bank’s revenue is largely derived from its asset holdings, which mainly included Government of Canada bonds and treasury bills. Prior to the COVID-19 pandemic, these bond holdings cost the bank very little, and their returns normally exceeded bank expenses…