Bank Of Canada’s Next Trick Involves A Delicate Three-way Balancing Act – Globe And Mail Op-ed
Even before the Bank of Canada’s interest rate announcement on Wednesday, the eyes of monetary policy watchers had shifted elsewhere – to the bank’s expanding balance sheet.
There was little surprise when the central bank left its target for the overnight rate at 25 basis points, with the deposit rate paid to banks also remaining at 25 basis points.
In fact, the target overnight rate is expected to remain where it is – a level at which the bank considers further cuts to be counterproductive – until at least well into 2021.
It is clear that the overnight rate will not be the centrepiece of the bank’s monetary policy for the foreseeable future.
Instead, the bank’s balance sheet and how it stickhandles it will…
Andrew Spence – Whither Inflation When Supply Chains Come Home?
From: Andrew Spence To: Inflation watchers Date: May 28, 2020 Re: Whither Inflation when Supply Chains Come Home? Canada was forced to ride into the medical supply wild west as pandemic driven supply shortages laid bare our inability to handle surge capacity in healthcare. And the suddenly exposed lack of domestic production capacity for […] Bank of Canada Should Keep Overnight Rate at 0.25 Percent, Focus on Implications of Expanded Balance Sheet: C.D. Howe Institute Monetary Policy Council
May 28, 2020 – The C.D. Howe Institute’s Monetary Policy Council (MPC) recommends that the Bank of Canada maintains its target for the overnight rate, its benchmark policy interest rate, at 0.25 percent for at least a year.
The MPC provides an independent assessment of the monetary stance consistent with the Bank of Canada’s 2 percent inflation target. Jeremy Kronick, Associate Director, Research, chaired today’s meeting, sitting in for the MPC’s usual chair, William Robson, the Institute’s President and CEO. 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.
All ten members…
Kronick, Zelmer, Dodge – Inflation Target: The Only Anchor Left
To: Policymakers in Ottawa From: Jeremy M. Kronick, Mark Zelmer, and David A. Dodge Date: May 26, 2020 Re: Inflation Target – The Only Anchor Left As governments across the country continue to announce massive fiscal stimulus, fiscal anchors have been appropriately set aside. However, to keep investor confidence in Canadian dollar denominated debt high, […] S2 E8 – Monetary Anchors with Mark Zelmer and Jeremy Kronick
Canada is emerging from the first wave of the pandemic with high levels of private and public debt. That’s why the Crisis Working Group on Monetary and Financial Measures is urging Canada to recommit to getting our fiscal and monetary houses in order once COVID-19 has passed. Working Group co-chair Mark Zelmer and C.D. Howe […] Kronick, Munn – Ensuring Capital For The Recovery
From: Jeremy M. Kronick and Duncan T. Munn To: Financial Sector Regulators Date: May 11, 2020 Re: Ensuring Capital for the Recovery The COVID-19 crisis has ravaged economies and damaged private sector balance sheets all around the world, Canada included. The Bank of Canada has seen its balance sheet more than triple in the last […] Kronick, Koeppl – For A Revamped Federal Backstop
From: Jeremy M. Kronick and Thorsten Koeppl To: Bill Morneau, Minister of Finance Date: May 8, 2020 Re: For a Revamped Federal Backstop The debate on whether and how the federal government should support the provinces given the exceptional circumstances surrounding COVID-19 has raged on over the last few weeks. Terms such as fiscal federalism, […] Kronick, Zelmer – Can The Bank Of Canada Keep Inflation On Target When The Economy Recovers?
From: Jeremy M. Kronick and Mark Zelmer To: Incoming Bank of Canada Governor Tiff Macklem Date: May 6, 2020 Re: Can the Bank of Canada keep inflation on target when the economy recovers? Congratulations on being appointed the next Governor of the Bank of Canada. The job is as important as ever. The Bank of […] Michael Smart – Ensuring The Independence Of The Bank Of Canada Remains Intact
From: Michael Smart To: Bank of Canada Governing Council Date: April 30, 2020 Re: Ensuring the independence of the Bank of Canada remains intact With its recent decision to extend quantitative easing policies to provincial debt, the Bank of Canada is setting off into uncharted waters. In recent weeks, the Bank has announced new large-scale […] Calibrating Macroprudential Policies for the Canadian Mortgage Market
While the effects of the COVID-19 outbreak on the housing market are yet unknown, a new C.D. Howe Institute report provides a blueprint for policymakers and regulators on the tools and timing of interventions in the housing market to address threats to financial stability. In “Calibrating Macroprudential Policies for the Canadian Mortgage Market,” authors Scott […] Kyle Hanniman – Backstopping Provincial Debt: How The Bank Of Canada Made Its Move
From: Kyle Hanniman To: Monetary Policy Watchers Date: April 28, 2020 Re: Backstopping provincial debt: How the Bank of Canada made its move On April 15, the Bank of Canada announced plans to extend its new quantitative easing program to provincial debt. The new Provincial Bond Purchase Program (PBPP) will buy up to $50 billion […] Mark Zelmer – Facilitating An Exit Strategy For Bank Of Canada Market Interventions
From: Mark Zelmer To: Governing Council and Minister Morneau Date: April 27, 2020 Re: Facilitating an Exit Strategy for Bank of Canada Market Interventions The Bank of Canada balance sheet has ballooned by more than $200 billion over the past six weeks. This has been accompanied by an unprecedented expansion in the range of assets […]