Le délicat virage de la Banque du Canada – La Presse Opinion

À 5,1 %, l’inflation est au plus haut depuis 30 ans, bien au-delà de la cible de 2 %. Malheureusement, il n’y a rien que le Banque puisse faire pour juguler l’inflation actuelle. Les changements de taux prennent de 18 mois à deux ans pour produire leurs pleins effets.

L’annonce des premières augmentations de 25 points de base (100 points égalent 1 %) aura avant tout un but psychologique : montrer que la Banque est déterminée à mater l’inflation. Le gouverneur Tiff Macklem veut éviter qu’elle ne s’incruste dans les esprits et ne modifie durablement les comportements.

Des sondages auprès des consommateurs et des entreprises, ainsi que le marché à terme des taux d’intérêt, reflètent encore l…

Higher inflation was a surprise. Higher interest rates should not be – Financial Post Op-Ed

Statistics Canada’s inflation report last week showed the consumer price index up 5.1 per cent year-over-year in January – more than forecasters and markets expected and more than the Bank of Canada’s latest projections implied. That’s not new: the CPI has risen more than expected most of the past year.

Expectations about how the Bank of Canada will raise its target for the overnight rate in response have also moved up – somewhat. Few forecasters and investors seem to expect an overnight rate above two per cent, at least not until well into 2023. But Canadians would be wise to prepare for an overnight rate of three per cent or more well before that.

The prospect of interest rates being higher than expected follows directly…

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Ambler, Kronick – The Bank That Didn’t Bark

Where’s the hike? Why didn’t the Bank of Canada act? – Financial Post Op-Ed

In a surprise move, the Bank of Canada kept its overnight rate target steady at 25 basis points Wednesday. Markets had already priced in a rate increase by the time the announcement was made, so there was ample cover to make this the first post-pandemic increase. That didn’t happen. With inflation rising at home and abroad, we believe this was a missed opportunity.

Steady increases in inflation and inflation expectations had led markets to believe the bank was set to increase its target for the overnight rate for the first time since the pandemic began. Headline inflation was up to 4.8 per cent in December, all of the bank’s core inflation measures had increased — with two of the three at or above three per cent — and its…

William B.P. Robson – Canada Needs to Take its Anti-Inflation Medicine Early

Ed Devlin on BNN – When you’re at a lower bound of interest rates, deflation is a greater problem than inflation

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 to provide his reaction to the Bank of Canada’s decision to hold interest rates steady. He says that keeping the rates will give the bank more options to deal with the uncertainties of the pandemic.

C.D. Howe Institute Monetary Policy Council Calls for Bank of Canada to Raise Overnight Rate, Shrink Bond Holdings

January 20, 2022 – The C.D. Howe Institute’s Monetary Policy Council (MPC) recommends that the Bank of Canada raise its target for the overnight rate, its benchmark policy interest rate, to 0.50 percent at its next announcement on January 26th. The Council recommended further increases over the coming year, with the target reaching 1.50 percent by January of 2023. It also recommends that the Bank reduce its holdings of Government of Canada bonds prior to its next overnight rate target announcement in March.

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…

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It’s painful. But the sooner we reduce inflation, the better – Globe and Mail Op-Ed

We have not seen inflation this high in Canada for decades. With it has come a resurgence of arguments not heard for many years, both about the causes of inflation and whether we should reduce it.

These arguments will be fierce. Getting inflation back to the 2-per-cent target set by the Bank of Canada will mean tighter monetary policy, including higher interest rates. That will hurt – but inflation hurts more. The sooner we settle on what to do about it, the easier reducing it will be.

Disagreement about what causes inflation matters. After all, if inflation were not related to monetary policy, asking the central bank to fix it would make no sense. Higher prices at stores or in Statistics Canada reports often seem…