Category Monetary policy
Comparing central banks’ responses to the credit crunch
Here’s an interesting graph from the Bank of Canada’s Monetary Policy Report: Yes, yes, I know; it’s almost impossible to tell the difference between the UK and Canada in that graph, but if you look at the original document and zoom in to 200% of the original size, you can (just barely) conclude that the […]
Why the Bank of Canada should stop cutting interest rates
Today’s CPI release has generated certain expectations (documented here, here, and I expect in pretty much every story covering the March inflation numbers) that a 50 bps cut in the overnight rate target is in the offing next Tuesday. Those expectations may very well be fulfilled – Mark Carney has been dropping broad hints ever […]
Mark Carney announces his presence with authority
The Bank of Canada lowered its overnight rate target by 1/2 of a percentage point to 3 1/2 per cent: [T]here are clear signs that the U.S. economy is likely to experience a deeper and more prolonged slowdown than had been projected in January. This stems from further weakening in the residential housing market, which […]
Should we be worrying about a ‘Carney put’?
Stackelberg Follower makes a point about the appointment of Mark Carney as Governor of the Bank of Canada that has been studiously avoided by commentators until now: I remain unconvinced that investment bankers should be running the central bank. Now, I don’t have a pathological hatred that most of them will likely earn more than […]
Oh, and the Bank of Canada also cut interest rates
The Bank of Canada lowered its target for the overnight rate by 25 bps, to 4% today. This came as a surprise to pretty much no-one: core inflation is below the 2% target, and everyone can see the signs of a US slowdown. Either of those is a sufficient reason to lower interest rates. Although […]
The CAD appreciation finally passes through to inflation
The long wait for the pass-through appears to be over: according to today’s CPI release, core inflation has gone from 2.5% in June down to 1.8% in September. (The headline CPI number was 2.4%). The only sectors where prices didn’t fall were in the areas least affected by the exchange rate: shelter and services. Although […]
Why would the Bank of Canada reduce interest rates on December 4?
The last time the Bank of Canada announced its target for the overnight rate, it decided to keep its previous level of 4.5%, and it said that that it was planning on keeping that rate for at least the next few months. It’s been a month since then; is there any reason why the Bank […]
The Bank of Canada shifts back to neutral
As predicted, the Bank of Canada decided to keep its overnight target at 4.5% on Tuesday. That’s twice now that the Bank has put off applying the tightening it started in July, and it looks as though this temporary pause has now been upgraded to a medium-term strategy. The October Monetary Policy Report (32-page pdf) […]
Jockeying for position at the Bank of Canada
In my post on Mark Carney’s appointment to the top job at the Bank of Canada, I said That’s twice in a row that a governor has been an external candidate – although he has worked there before. I suspect that Bank employees who are thinking about the top job will start sending their CVs […]
A week of mixed signals for the Bank of Canada
On the one hand, the Bank of Canada has had to intervene repeatedly in the overnight market to defend its target. (It has also added liquidity in the the two days since that post: $495m yesterday and again $420m today.) And the spread between the overnight rate and that of short-term paper is still well […]
Worthwhile Canadian Initiative 
Recent Comments