Jeremy M. Kronick and Mark Zelmer – Assessing the Impending Grunts and Twitches from the US Elephant
From: Jeremy M. Kronick and Mark Zelmer To: Monetary policy observers Date: November 18, 2024 Re: Assessing the Impending Grunts and Twitches from the US Elephant Pierre Trudeau noted the challenges of sleeping next to the US elephant 55 years ago, and how Canada is affected by its every twitch and grunt. Now, unsurprisingly, the return of Donald Trump […]A New Monetary Policy Tool: The Real Neutral Rate Yield Curve for Canada
With the Bank of Canada engaging in both conventional and unconventional monetary policy, the difference between the Bank of Canada’s policy rate and the neutral rate when the economy is at potential and inflation is on target is no longer sufficient in determining whether – and to what degree – monetary policy is stimulative or […] Jeremy M. Kronick and Steve Ambler – Sooner Rather than Later Needed for More Rate Cuts
To: Inflation Watchers From: Jeremy M. Kronick and Steve Ambler Date: October 28, 2024 Re: Sooner Rather than Later Needed for More Rate Cuts The inflation beast is looking considerably weaker. Between the Bank of Canada’s rate announcement on September 4 and its announcement last Wednesday, Statistics Canada released two of its monthly reports on the consumer price index. They […] Jeremy Kronick and Steve Ambler – The Bank of Canada must loosen monetary policy at a faster pace
Published in the Globe and Mail.
The inflation beast is looking considerably weaker. Between the Bank of Canada’s rate announcement on Sept. 4 and its announcement on Wednesday, Statistics Canada released two of its monthly reports on the consumer price index. They showed that headline inflation fell by almost a full percentage point and is now well below target.
For this reason, markets were not surprised by the 50-basis point cut in the Bank of Canada’s overnight rate target. The cut was fully baked into market expectations, and there was even speculation about a supersized cut of 75 basis points.
As it is, the bank has more work to do with its overnight rate. With inflation falling faster than the policy rate,…
Bumps in the Road: Ever-Evolving Monetary Policy in Canada
In this paper, the authors investigate the responses of the Bank of Canada to inflation and economic conditions using a novel dataset that contains data and forecasts that were available to policymakers at the time monetary policy decisions were made. Over the inflation-targeting years from 1991, the Bank’s responses have evolved. The Bank gradually increased […] Graph of the Week: Rising Federal Debt Charges After 30-Year Decline
Public debt charges are what the government spends to pay the interest on its outstanding debt. After a 30-year decline from their 1990s highs, federal public debt charges as a share of GDP are now on the rise. With an election looming and the customary costly spending promises from all parties, it will be interesting […] Jeremy M. Kronick on BNN Bloomberg – How a 2% interest rate could impact mortgage rates
As Canada stays on track for a 2 percent inflation rate, what could this mean for mortgage rates? Jeremy M. Kronick, Vice-President, Economic Analysis and Strategy at the C.D. Howe Institute, explains.
Jeremy M. Kronick on BNN Bloomberg – Bank of Canada delivers 50 bps rate cut
Jeremy M. Kronick, Vice-President, Economic Analysis and Strategy at the C.D. Howe Institute, joins BNN Bloomberg to talk about The Bank of Canada delivering 50 bps rate cut.
C.D. Howe Institute Monetary Policy Council Calls for Bank of Canada to Cut Overnight Rate to 3.75 Percent Next Week, 3.00 by Spring, 2.50 Percent in a Year
October 17, 2024 – The C.D. Howe Institute’s Monetary Policy Council (MPC) calls for the Bank of Canada to lower its target for the overnight rate, its benchmark policy interest rate, to 3.75 percent at its next announcement on October 23rd. The MPC further calls for the Bank to lower the target to 3.50 percent at the following announcement in December, to 3.00 percent by April of 2025, and to 2.50 percent by October of 2025.
The MPC provides an independent assessment of the monetary stance consistent with the Bank of Canada’s 2 percent inflation target. MPC co-chair William Robson, the Institute’s President and CEO, chaired this meeting. MPC members make recommendations for the Bank of Canada’s target for the overnight rate…
Kronick, Ambler – Why the Bank Needs to Think Bigger For its Next Rate Cut
From: Jeremy M. Kronick and Steve Ambler To: Canadian economic observers Date: October 2, 2024 Re: Why the Bank Needs to Think Bigger For its Next Rate Cut It is rare for the Bank of Canada to change its policy interest rate by more than 25 basis points, either up or down. Big changes have been reserved for crises, […] Ambler, Kronick – If inflation falls again, BoC should cut interest rates 50 points
Published in the Financial Post.
It is rare for the Bank of Canada to change its policy interest rate by more than 25 basis points, either up or down. Big changes have been reserved for crises, like the beginning of the pandemic, when the Bank made three 50-basis-point cuts in a single month, or when inflation is running out of control, as it was in late 2022 when the bank raised its rate by 50 basis points. Last week’s news that inflation has returned to the bank’s two percent target does not signal a crisis but in our view it does mean a larger-than-normal cut is called for. Without an aggressive cut, the economy could tip into a needless recession.
It’s been a long road since inflation first rose above its official two…
Graph of the Week: Core Inflation Components Fall Below 3% – A Sign of Broad Softening
Graph of the Week is a new series from the C.D. Howe Institute’s Graphic Intelligence that presents valuable and easily digestible data. Each Monday we unveil one new captivating chart or graph with interesting insights, explaining it in two-to-three sentences. Dive into the data with us.Headline inflation came in right at the 2 percent target […]