With its neutral nominal rate estimate, the Bank of Canada enters uncharted territory – Globe and Mail Op-Ed
As expected, the Bank of Canada held its overnight rate target constant at 1.75 per cent this week.
More unexpectedly, with the release of its latest Monetary Policy Report, the central bank lowered its estimate of the neutral nominal rate – the rate compatible with full-capacity output and inflation equal to the 2-per-cent target – to 2.25 per cent to 3.25 per cent, from 2.5 per cent to 3.5 per cent. This means that the constant overnight target rate is closer to the neutral rate than previously thought, providing less stimulus to the economy. As the lower end of the range gets closer to 2 per cent, meaning the real neutral rate would be zero, it is fair to ask how much lower the neutral rate can go.
From a data…
Central Banks and the Future of Money
April 9, 2019 — Central banks around the world are now giving serious consideration to the pros and cons of making central bank digital currencies available to the general public, says a new study from the C.D. Howe Institute. In “Central Banks and the Future of Money,” former Deputy Governor of the Bank of Canada John […] Jeremy M. Kronick – Are shared mortgages the fix?
From: Jeremy M. Kronick To: Toronto and Vancouver Millennials Date: March 26, 2019 Re: Are shared mortgages the fix? After nearly a decade of policies geared at cooling an overheated housing market and trying to slow growth in household debt, Ottawa made affordability the name of the game in Budget 2019. The Department of Finance introduced the […] Ambler, Kronick – The softer outlook for inflation
From: Steve Ambler and Jeremy M. Kronick To: Bank of Canada Watchers Date: March 22, 2019 Re: The softer outlook for inflation The last 365 days has highlighted the challenge of being a central banker. Last year, with inflation starting to consistently hit the 2 percent target, and the output gap indicating an economy finally getting close […] S1 E3 – Pre-Budget Edition – No Rainy Day Funds
The Federal Government hasn’t been saving for a rainy day. And that rainy day may be coming as early as 2020. The C.D. Howe Institute’s Bill Robson and Queens University economist Don Drummond discuss how to bring Canada back to a balanced budget in an environment of rising interest rates, slowing economic growth going into […]William B.P. Robson – Canada’s Exchange Rate: No Fear Of Floating
From: William B.P. Robson To: Canadian-dollar watchers Date: February 7, 2019 Re: Canada’s Exchange Rate: No Fear of Floating Bank of Canada Deputy Governor Tim Lane noted in a speech this week that it is more than 20 years since the Bank intervened in the foreign exchange market to support the Canadian dollar. His topic was “The Canadian Approach to Foreign […] Is The Money Supply Signalling A Slump?
In this edition of Graphic Intelligence, we highlight the slow growth in Canada’s money supply, namely M1+, which is one of the Bank of Canada’s measures of money supply. Measures of money supply – currency plus various types of deposits – are growing at their slowest rates since the financial crisis a decade ago. Considered a […]Robson, Kronick – Money Growth in Canada is Ominously Weak
From: William B.P. Robson and Jeremy M. Kronick To: Governing Council, Bank of Canada Date: January 09, 2019 Re: Money Growth in Canada is Ominously Weak Something weird has happened to Canada’s money supply. Growth in the measures of money the Bank of Canada highlights on its website, currency plus various types of deposits and liquid financial […] Ambler, Kronick – Monetary Policy in a Low-Interest-Rate, Low-Inflation World
From: Steve Ambler and Jeremy Kronick To: The Bank of Canada Governing Council Date: January 3, 2019 Re: Monetary Policy in a Low-Interest-Rate, Low-Inflation World The Bank of Canada should restore the important role of tracking the money supply as a predictor of future inflation and economic performance. In our new book, “Navigating Turbulence: Canadian Monetary Policy Since 2004,” […]The Bank Of Canada Needn’t Overhaul Its 2% Inflation Target. It’s A Proven Success – Financial Post Op-ed
There are signs of strain in the Bank of Canada’s monetary-policy framework that has served Canadians so well over the past quarter-century, delivering low and stable inflation.
Apparently aware of the challenges ahead, the bank’s senior deputy governor, Carolyn Wilkins, went so far as to say in a recent speech that the bank will review all its policy options leading up to the next renewal (in 2021) of the inflation-control agreement between the federal government and the Bank of Canada. While some cracks are appearing, we would argue tweaks are all that is required.
The Bank of Canada has targeted inflation since 1991 and kept the target at two per cent since 1996. The inflation-targeting framework has delivered stable…
Jeremy Kronick on BNN – Bank of Canada should better track money supply
A new book is calling on the Bank of Canada to better track money supply as part of its inflation forecasting. For more on this, BNN Bloomberg spoke with Jeremy Kronick, associate director at C.D. Howe Institute and author of “Navigating Turbulence: Canadian Monetary Policy since 2004.”
Navigating Turbulence: Canadian Monetary Policy Since 2004
The Bank of Canada should restore the important role of tracking the money supply as a predictor of future inflation and economic performance, according to a major new book on the conduct of monetary policy from the C.D. Howe Institute. In “Navigating Turbulence: Canadian Monetary Policy Since 2004,” authors Steve Ambler and Jeremy Kronick assess […]