Glen Hodgson – What Will A Pandemic Mean For Economic Performance?

S2 E5 – COVID-19 Emergency Response Package

Kronick, Ambler – The Path Forward For The Bank Of Canada

Hodgson, Schwanen: Looking Beyond Macro-Economic Policies to Address Consequences of COVID-19

Ambler, Kronick – The Covid-19 Monetary Policy Problem

Kronick, Robson – The Bank Of Canada And Covid-19

Bank of Canada should have kept more of its powder dry in case things get worse – Financial Post Op-Ed

The Bank of Canada was right to cut interest rates last week but it may have been wiser to reduce them by only 25 basis points rather than 50 and thus keep more firepower in reserve in case it’s needed in coming weeks.

The Bank likely was leaning heavily towards an interest rate cut even before the Fed’s unscheduled and surprising 50 basis point federal funds rate cut last Tuesday. That might have given the Bank the final nudge to follow suit in its regularly scheduled rate decision a day later. Given the complexity of COVID-19, a cut of at least 25 basis points was likely the right call. The key was to move swiftly and decisively, which the Bank did. The only uncertainty was whether it would take as drastic a step as the Fed. In…

There’s a better barometer for determining Canadians’ financial fragility – Financial Post Op-ed

Over the past 25 years, Canadians’ household debt has increased steadily as a share of their disposable income. During this time, and especially since the financial crisis, they have often been told their debt levels were unsustainable and that a day of reckoning was fast approaching. And yet that day has not come. One reason why seems clear: for the most part over the past 25 years, the amount Canadians spend servicing their debt has not changed as a percentage of their disposable income.

In a recent C.D. Howe Commentary, we argue that it is primarily this “debt service ratio” (interest payments plus reimbursement of principal divided by disposable income) that determines households’ ability to make their payments at…

Bank of Canada Should Cut Overnight Rate to 1.50 Percent Next Week and to 1.25 in April: C.D. Howe Institute Monetary Policy Council

February 27, 2020 – The C.D. Howe Institute’s Monetary Policy Council (MPC) recommends that the Bank of Canada lower its target for the overnight rate, its benchmark policy interest rate, to 1.50 percent next week. The MPC further recommends that the Bank cut again at its next announcement in April, to 1.25 percent, and hold the target there until early 2021.

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 President and 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…

Canada’s shadow banks are now too big to ignore – National Post Op-Ed

In Canada the financial services sector weathered the 2007-08 global “credit crunch” better than it did in many other developed countries. One argument for why, certainly in contrast to the U.S., was the smaller size of our “non-bank financial intermediation” (NBFI) sector, more commonly referred to as “shadow banking.” But rapid growth in the shadow sector since the crisis suggests this resilience might be under threat. What does that mean for monetary policy, financial stability and regulation? As it turns out, a lot.

Broadly speaking, the shadow sector includes investment funds, private lenders like mortgage finance companies, companies that offer private-label securitization like asset-backed securities, and more. Shadow…

Predicting Financial Crises: The Search for the Most Telling Red Flag in the Economy

S2 E2 – Inequality and Monetary Policy