Kronick, Ambler – There’s Every Reason to Keep Going with Rate Cuts
To: Interest Rate Watchers From: Jeremy M. Kronick and Steve Ambler Date: July 30, 2024 Re: There’s Every Reason to Keep Going with Rate Cuts When headline inflation increased to 2.9 percent in May, up from 2.7 percent in April, there was much speculation that the Bank of Canada would pause its rate cuts. However, inflation ticked back down […] Graph of the Week: The 5-Year Fixed Interest Rate
Introducing Graph of the Week, a new series from the C.D. Howe Institute’s Graphic Intelligence that presents valuable and easily digestible data. Each Monday we will unveil one new captivating chart or graph with interesting insights, explaining it in two-to-three sentences. Dive into the data with us. The 5-year fixed interest rate is the most […] C.D. Howe Institute Monetary Policy Council Calls for Bank of Canada to Lower Overnight Rate to 4.50 Percent, Cut to 3.25 Percent by July 2025
July 18, 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 4.50 percent at its next announcement on July 24th. The MPC further calls for the Bank to lower the target to 4.25 at the following announcement in September, on the way to a target of 3.25 percent by July 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, Jeremy Kronick, the Institute’s Associate Vice President and Director of the Centre on Financial and Monetary Policy, chaired this meeting. MPC members make…
Don Drummond – Rate Cuts Unlikely to Cut Mortgage Costs Any Time Soon
From: Don Drummond To: Canadian mortgage watchers Date: June 19, 2024 Re: Rate Cuts Unlikely to Cut Mortgage Costs Any Time Soon Media reports abound with speculation Bank of Canada interest rate cuts will lift the Canadian housing market. To be sure, there are caveats that rate cuts will likely be slow. Less mentioned is the likelihood they will […] Kronick, Ambler – More Rate Cuts Coming: How Far and Fast Are Now the Questions
To: Interest rate watchers From: Jeremy M. Kronick and Steve Ambler Date: June 10, 2024 Re: More Rate Cuts Coming: How Far and Fast Are Now the Questions The Bank of Canada finally pulled the trigger last Wednesday and reduced its policy rate by 25 basis points. Forecasters were split between a June or July cut, but overall, the […] Lester, Robson – What To Do About Canada’s Debt Problem
From: John Lester and William Robson To: Federal and Provincial Governments Date: June 7, 2024 Re: What To Do About Canada’s Debt Problem Participants in the C.D. Howe Institute’s recent conference on Canada’s debt problem had some pointed advice for our federal and provincial governments: Canada’s public debt should be about 10 percentage points of GDP lower to ensure its […]Kronick, Ambler – Predicting (and Confirming) Business Cycles in Canada
To: Recession forecasters From: Jeremy M. Kronick and Steve Ambler Date: May 24, 2024 Re: Predicting (and Confirming) Business Cycles in Canada A recent staff working paper by Temel Taskin and Franz Ulrich Ruch at the Bank of Canada uses a sophisticated model – a dynamic autoregressive (AR) probit model – and business cycle turning points published by the C.D. Howe […] Monetary Policy Council
The C.D. Howe Institute Monetary Policy Council is comprised of 12 of Canada’s most distinguished financial-market and monetary economists. Chaired by the Institute’s President and CEO Jeremy Kronick, the Council provides the Bank of Canada, financial-market participants, and economic policy commentators with a regular independent assessment of the appropriate stance of Canadian monetary policy as the […] Munn, Manley and Duncan – Short-sighted Capital Gains Changes Will Bring Long-Term Consequences
From: Duncan Munn, John Manley and Dwight Duncan To: Finance Minister Chrystia Freeland Date: April 30, 2024 Re: Short-sighted Capital Gains Changes Will Bring Long-Term Consequences This month’s federal budget asks the wealthiest among us to pay for spending initiatives to address intergenerational fairness. A better way to finance new spending would be to arrest and reverse Canada’s growth and […]Kronick, Ambler – No Rate Cut Yet. Here’s Why There Should Have Been
To: Interest rate watchers From: Jeremy M. Kronick and Steve Ambler Date: April 26, 2024 Re: No Rate Cut Yet. Here’s Why There Should Have Been The latest data indicate that the battle against inflation is almost over. Despite this, the Bank of Canada again held its policy rate at 5 percent this month. What gives? The Bank, like many other central […] As the Bank of Canada resists rate cuts, is it falling behind the curve again? – Globe and Mail
The latest data (from February) indicate that the battle against inflation is almost over. Despite the encouraging inflation data, the Bank of Canada again held its policy rate at 5 percent on Wednesday. What gives? The bank, like many other central banks, was slow off the mark to raise rates as inflation took off. We worry it runs the risk of falling behind the curve again.
First, let’s examine why the bank might be hesitating to cut – the housing market and fiscal policy. Then, let’s examine why, in our view, that’s not enough.
Year-over-year headline inflation dropped inside the bank’s 1-3 percent range in January, and continued to fall in February, sitting at 2.8 percent. Core inflation, which strips out more volatile…
Jeremy Kronick on BNN – If the BoC waits too long to cut rates, it may fall behind the curve
Jeremy Kronick, Associate Vice President and director of the Centre on Financial and Monetary Policy, joins BNN Bloomberg to discuss the path for rate cuts in Canada, inflation and the fiscal policy.