Category Monetary policy
The Bank of Canada says “It ain’t broke, so we’re not fixin’ it”
To the surprise of very few observers, the Bank of Canada is sticking to the policy that got it to its (quite enviable) current situation: Joint Statement of the Government of Canada and the Bank of Canada on the Renewal of the Inflation-Control Target The primary objective of Canada’s monetary policy is to enhance the […]
Dealing with a terms of trade shock
The most important graph from the Bank of Canada’s Monetary Policy Report (pdf): The shift in the terms of trade plays a leading role in the story of the the Canadian macroeconomy over the past five years. Deputy Governor Pierre Duguay’s speech last August puts it this way: "The substantial rise in real commodity prices […]
The Bank of Canada leaves the overnight rate at 4.25%
Even though the growth in demand has slowed somewhat – largely due to a slowdown in exports to the US – the Bank isn’t in any particular hurry to start lowering interest rates just yet. According to their projection, demand will still be strong enough to be putting upward pressure on inflation for at least […]
The Bank of Canada’s Business Outlook Survey: It’s quiet. It’s *too* quiet.
From the autumn survey (pdf): "The balance of opinion on future sales growth has fallen close to zero, indicating that sales are expected to increase at about the same pace as in the past 12 months. Many firms in Western Canada, including those in the services sector, are facing capacity constraints and therefore do not […]
Because a good central banker will always be worrying about something
Inflation is in the middle of the target zone, output is at capacity, and the overnight rate is where the Bank of Canada thinks it should be to keep things that way. But that doesn’t mean that it’s become complacent: Central bank issues stimulus warning: Bank of Canada cautions provinces, Ottawa on plans for budget […]
Why oh why, etc: Canadian edition
In which the Canadian business press goes out of its way to track down a meaningless piece of information, and interprets it in the worst possible way (h/t to true dough) : Bloomberg: Canadian Dollar Still Undervalued After Rally, Memorandum Says: The Canadian dollar is undervalued and doesn’t yet reflect the benefit to the country’s […]
The Fed faces a tricky rebound
Although the Bank of Canada and the Fed have both chosen to stop increasing interest rates, they did so for very different reasons. When the Bank of Canada called a halt to interest rate increases last month, it did so because it thought it had hit the sweet spot – inflation on target, output at […]
The new Governor of the Reserve Bank of Australia and I have something in common
We both did our MA at the University of Western Ontario during the academic year 1984-85. I’m pretty sure that Glenn Stevens was the best student of our cohort (I think I was second), and I remember him telling me that UWO tried very hard to persuade him to stay on to do a PhD. […]
The Bank of Canada will not raise interest rates tomorrow
When the Bank raised the overnight rate target by 25 basis points to 4.25% on May 24, it seemed to be for the last time (after seven such raises since last September), barring a significant change in the data: BoC Press release: …[T]he target for the overnight rate is now at a level that is […]
The Bank of Canada and the Fed face very different problems
Up until recently, the Bank of Canada and the Fed have pretty much followed similar paths. This is less a case of the Bank slavishly following the Fed’s lead than the fact that they’ve been generally facing similar policy challenges. But this cycle seems to be quite different.
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