William B.P. Robson – Interest Rate Hikes Are Coming

Ambler, Kronick – Will Ending Supply Bottlenecks Solve Inflation?

The Bank of Canada’s mandate: steady as she goes – Financial Post Op-Ed

On Monday the Bank of Canada and Government of Canada finally announced the renewal of their agreement concerning the country’s monetary policy framework. The announcement reconfirmed their joint commitment to the two per cent inflation target within a band of one to three per cent. With the current agreement expiring at the end of the month, the down-to-the-wire announcement had led some pundits to expect a major surprise, and even in the follow-up coverage there are hints some believe this is what happened. We do not see it that way – which is good. The Bank’s mandate remains essentially unchanged from the last renewal, and from renewals all the way back to 1995 when the two per cent inflation target was first implemented. Extending…

Brace for impact: Rate hikes are coming – Globe and Mail Op-Ed

Bank of Canada governor Tiff Macklem, like U.S. Fed chairman Jerome Powell, is clearly starting to view continuing high inflation with concern. A change is coming in monetary policy. With demand outrunning supply, our central banks’ policy interest rates need to rise – and may rise a lot.

Before COVID-19 triggered a monetary explosion, inflation in Canada and the United States had been so low for so long that most people could ignore it, and ignore monetary policy as well. Inflation was reliably close to 2 per cent year after year. The Bank of Canada’s overnight rate, its benchmark policy rate, and the U.S. equivalent, the Fed Funds rate, moved much less than they had when inflation was high and variable. How central bank policy…

Ambler, Kronick, Robson – Down to the Wire on the Monetary Policy Framework

David Laidler – Freeing the Bank of Canada from its Own Trap

Time for the Bank of Canada to make a hard choice – Financial Post Op-Ed

I first heard the gibe that “central bankers think inflation is always and everywhere a monetary phenomenon – except this time, of course” more than 50 years ago, but it is still as good as new.

Consider the Bank of Canada, now caught in a trap of its own making. Its mandate, pending an imminent renewal, requires it to maintain inflation in a range around two per cent, but its “forward guidance,” issued incessantly for the past year, has promised to keep the overnight rate of interest at 0.25 per cent until the real economy has returned to “normal” — at a date that lately seems to have been creeping closer from its original value somewhere around the end of 2022. The Bank is stuck with two quantitative targets, one, an inflation…

The Bank of Canada’s inflation target: Stick with what works – Financial Post Op-Ed

Inflation has risen to almost five per cent and the year-end deadline for the federal government and the Bank of Canada to announce a new monetary policy framework is barely three weeks away. Should we be nervous?

Since 1991, the framework has been an inflation-control target, and since the end of 1995 that target has been two per cent. That system has been a striking success. The CPI’s average increase over the 25 years from 1995 until the onset of the pandemic was 1.9 per cent annually. Previous five-year renewals of the inflation-control agreement were quiet affairs with only minor tweaks.

Not so this time. COVID’s hit to productive capacity has combined with massive monetary and fiscal stimulus to push inflation well…

William B.P. Robson – The Lasting Harm of ‘Transitory’ Inflation

C.D. Howe Institute Monetary Policy Council Calls for Bank of Canada to Hold Overnight Rate at 0.25 Percent Next Week, Hike to 1.00 Percent Next Year, Shrink Bond Holdings

December 2, 2021 – The C.D. Howe Institute’s Monetary Policy Council (MPC) recommends that the Bank of Canada keep its target for the overnight rate, its benchmark policy interest rate, at 0.25 percent through next January, before raising it to 0.75 percent by June of 2022, and to 1.00 percent by December of 2022. It also recommends that the Bank reduce its holdings of Government of Canada bonds between now and its next overnight-rate target announcement in January.

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…

Two Sides of the Same Coin: Why Stablecoins and a Central Bank Digital Currency Have a Future Together

The “Demand Stabilization Mechanism”: Using Temporary GST Cuts as Automatic Fiscal Policy