Bank of Canada Should Stay the Course on Rates: Globe and Mail Op-Ed
After a prolonged wait, the U.S. Federal Reserve raised its target for the Fed funds rate by 25 basis points last week. Its statement also hinted at three possible increases in 2017. Many Canadians are now asking if the Bank of Canada should raise its overnight rate in response. The short answer is “No.” Following the Fed’s rate hike, the Bank of Canada should do exactly what it was doing before the Fed’s hike: setting its overnight rate at the level required to hit its 2-per-cent inflation target.
That might seem like a simplistic answer. The Fed’s move, and the hawkish commentary that accompanied it, did send long-term interest rates and the U.S. dollar higher. Lots of people reacted. Shouldn’t we react, too?
Starting…
Bank of Canada Should Hold Overnight Rate at 0.50 Percent for Next Year: C.D. Howe Institute Monetary Policy Council
December 1, 2016 — The C.D. Howe Institute’s Monetary Policy Council (MPC) today called for the Bank of Canada to keep its target for the overnight rate, the very short-term interest rate it targets for monetary policy purposes, at 0.50 percent at its next announcement on December 7, 2016. Looking ahead, the Council said the Bank should hold the target at 0.50 percent over the next six months, and narrowly voted for it to stay there until December of 2017.
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…
Live from the Annual Benefactors’ Lecture – Stephen Poloz, Governor of the Bank of Canada
Live fromthe Institute’s Annual Benefactors’ Lecture, watch Stephen Poloz, Governor of the Bank of Canada, as he delivers his remarks on conducting monetary policy in turbulent times. Speech to commence at 8 pm, EST.
Bank of Canada Needs a New Tool to Face the Next Great Recession: Globe and Mail Op-Ed
In the Great Recession of 2007-2009, the Bank of Canada was able to minimize the damage to the Canadian economy relatively easily. However, the low interest rate environment continuing to dog all central banks is likely to make the bank’s current monetary policy tool kit insufficient to deal with any repeat of 2007-2009.
The government of Canada and the Bank of Canada announced the renewal of the inflation-control target on Oct. 24. The announcement contained no surprises, leaving the main features of the previous control target unchanged. For the next five years, the target will remain a year-over-year growth rate of 2 per cent in the consumer price index, expressed as the midpoint of a 1- to 3-per-cent range.
However,…
Jeremy Kronick – Bank of Canada Options for Minimizing US Election Fallout
From: Jeremy Kronick To: Stephen Poloz Date: November 10, 2016 Re: Bank of Canada Options for Minimizing US Election Fallout There is already clamoring, in light of President-elect Trump’s stunning victory, for you to cut rates at the next meeting of the Governing Council on December 7. The argument is as follows: President-elect Trump has […]Putting Money to Work: Monetary Policy in a Low Interest Rate Environment
Expanding the money supply is the best option for the Bank of Canada in a low interest rate environment, states a new report from the C.D. Howe Institute. In “Putting Money to Work: Monetary Policy in a Low Interest Rate Environment,” author Steve Ambler suggests that it should use quantitative easing (QE) to increase the […] Thorsten Koeppl – When Doves Become … Kiwis
From: Thorsten Koeppl To: Stephen S. Poloz Date: October 24, 2016 Re: When Doves Become … Kiwis This week, the Bank of Canada left interest rates unchanged. Business as usual one might think. But far from it. In your remarks to the Standing Senate Committee on Banking, Trade and Commerce, you all but made the […]C.D. Howe Institute Monetary Policy Council: Bank of Canada Should Hold Overnight Rate at 0.50 Percent for Six Months, Hike to 0.75 Percent by October 2017
October 13, 2016 — The C.D. Howe Institute’s Monetary Policy Council (MPC) today called for the Bank of Canada to keep its target for the overnight rate, the very short-term interest rate it targets for monetary policy purposes, at 0.50 percent at its next announcement on October 19, 2016. Looking ahead, the Council said the Bank should hold the target at 0.50 percent over the next six months, and called for an increase to 0.75 percent in a year’s time.
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…
Jeremy Kronick – Negative Interest Rates
From: Jeremy Kronick To: Bank of Canada Date: September 22, 2016 Re: Negative Interest Rates In a recent study, the Bank of Canada discussed the true nature of the effective lower bound for nominal interest rates and showed that it is not in fact zero, as was the widely-held assumption. Furthermore, some countries are currently testing […]Steve Ambler – Getting Monetary Policy Right as a Response to Oil Shocks
From: Steve Ambler To: The Bank of Canada Date: September 20, 2016 Re: Getting Monetary Policy Right as a Response to Oil Shocks Uncertainty is harming Alberta’s petroleum sector in many ways. Oil prices are likely to remain depressed until well into next year, though this result depends on many factors including world demand and the Saudi […] C.D. Howe Institute Monetary Policy Council Says Bank of Canada Should Hold Overnight Rate at 0.50 Percent for Next Six Months, Hike to 0.75 Percent by September 2017
September 1, 2016 — The C.D. Howe Institute’s Monetary Policy Council (MPC) today called for the Bank of Canada to keep its target for the overnight rate, the very short-term interest rate it targets for monetary policy purposes, at 0.50 percent at its next announcement on September 7, 2016. Looking ahead, the Council said the Bank should hold the target at 0.50 percent over the next six months, but called for an increase to 0.75 percent in a year’s time.
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…
Ripple Effects: Oil Price Shocks and Monetary Policy
August 30, 2016 – The effects of large oil price shocks on the Canadian economy are complex, as is the best response of monetary policy, but getting it wrong can be very costly, according to a new C.D. Howe Institute report. In “Ripple Effects: Oil Price Shocks and Monetary Policy,” author Steve Ambler argues that […]