Lessons from the Yield Curve: Evaluating Monetary Policy in Different Interest Rate Environments
Bank of Canada Policy Must Adapt to Changing Interest Rate Environments The Bank of Canada needs to take into account prevailing interest rate environments and adjust its monetary policy tools accordingly, finds a new report from the C.D. Howe Institute. In “Lessons from the Yield Curve: Evaluating Monetary Policy in Different Interest Rate Environments,” authors […] Ed Devlin on BNN – The hidden sting in removing stimulus: A tide of new debt
Ed Devlin, Senior Fellow at the C.D. Howe Institute and founder of Devlin Capital, joined BNN Bloomberg and discussed the Bank of Canada being in uncharted territory as it implements quantitative tightening – the shrinking of its balance sheet – while also tightening interest rates. He advised the Bank to be flexible if a flood of new government bonds ends up swamping Canada’s illiquid market.
Ambler, Kronick – Thanks, We Needed That. Why the Bank Move Was the Right One
From: Steve Ambler and Jeremy M. Kronick To: Bank of Canada Governing Council Date: July 20, 2022 Re: Thanks, We Needed That. Why the Bank Move Was the Right One Last week, the Bank of Canada increased the scope of its interest rate increases, raising its overnight rate target by 100 basis points to 2.5 per cent. We […] Von Finckenstein, Denham – Canada Needs Coherent Digital Regulation (II)
From: Konrad von Finckenstein and Elizabeth Denham To: Canada’s Digital Regulators Date: June 16, 2022 Re: Canada Needs Coherent Digital Regulation (II) Yesterday we outlined the regulatory challenges Canada faces in the digital realm as the federal government wrestles with reviews of its competition, Internet regulation and privacy legislation. We pointed to the UK example where initially three agencies […] William B.P. Robson on BNN – Canada’s productivity ‘terrible’ compared to other countries
Bill Robson, CEO of C.D. Howe Institute, joins BNN Bloomberg for reaction to former finance minister, Bill Morneau sounding the alarm on Canada’s economic future. He agrees the current federal Liberal government is not thinking about long-term growth and that Canada is behind on infrastructure development, productivity, and even intangible investments.
David R. Johnson – What Education-Testing Chant Should We Choose in 2022?
From: David R. Johnson To: Ontarians Concerned About Education Date: May 18, 2022 Re: What Education-Testing Chant Should We Choose in 2022? Two chants are on offer: “Hey Ho, Hey Ho, the EQAO must GO!” “Hey Hey, Hey Hey, the EQAO must STAY!” These chants summarize opposing views in […] Robson, Laurin – Ottawa’s Spending Addiction: $2 Billion More Each Month
From: William B.P. Robson and Alexandre Laurin To: Canadian Debt Watchers Date: April 29, 2022 Re: Ottawa’s Spending Addiction: $2 Billion More Each Month “Build back better!” We have heard that a lot since COVID hit – mainly from advocates for government spending, who saw pandemic-related fiscal stimulus, financed by central bank bond purchases, as suddenly making things […] Building back bigger: How Ottawa grew under cover of COVID – Financial Post Op-Ed
“Build back better!” We have heard that a lot since COVID hit — mainly from advocates for government spending, who saw pandemic-related fiscal stimulus, financed by central bank bond purchases, as suddenly making things that had seemed out of reach affordable.
The 2022 federal budget highlights their success. Ottawa’s last pre-COVID projections, in its 2019 fall update, showed federal spending at $421 billion in fiscal year 2024-25. The 2022 budget’s projections have it at $479 billion a year (adding back $2 billion in pension obligations the government stopped including meanwhile). That’s $58 billion more, long after COVID-related measures are gone. The slogan we should have been hearing is “Build back bigger!”
In 2019, a…
John Lester – Who Will Pay for the Pandemic-Induced Debt?
From: John Lester To: Canadians Hoping for a Fiscally Responsible Federal Government Date: April 21, 2022 Re: Who Will Pay for the Pandemic-Induced Debt? “We are absolutely determined that our debt-to-GDP ratio must continue to decline,” said Finance Minister Chrystia Freeland in her budget speech this month. “Our deficits must continue to be reduced. The […] The Bank of Canada’s rate hike: You can’t fight inflation on the QT – Financial Post Op-Ed
With inflation on the rise, the Bank of Canada kicked its tightening cycle into high gear Wednesday by announcing a 50-basis-point increase in its target for the overnight rate — the first non-25-basis-point hike in over 20 years. It also modified its stance concerning its over-sized holdings of Government of Canada bonds, which swelled its balance sheet during so-called Quantitative Easing (QE). Those days are over: it will now initiate Quantitative Tightening, or QT, by not replacing bonds on its balance sheet as they mature, thus reducing its bond holdings over time.
Some might be disappointed the bank didn’t go further on QT by announcing it would actually start selling its holdings of government bonds. Not to worry.…
William B.P. Robson – The Federal Gas Pedal Meets Bank of Canada Brakes
From: William B.P. Robson To: Canadians Worried About a Hard Landing Date: April 6, 2022 Re: The Federal Gas Pedal Meets Bank of Canada Brakes With inflation pushing 6 percent, and federal debt up about half-a-trillion dollars in two years, Canadian macroeconomic policy is a mess. It will get worse. The Bank of Canada is moving to get inflation […] Inflation Surprises, Interest Rates Should Not
In late February, an Intelligence Memo by Bill Robson warned that expectations of interest-rate hikes by the Bank of Canada might be lagging expectations about inflation. Using the Bank’s three favoured measures of core inflation as proxies for inflation expectations, Robson argued that the Bank’s overnight rate had become strongly negative in real terms. Reining […]