Category Monetary policy
Oil prices and the Canadian dollar: A mystery solved
In an earlier post, I noted that the relationship between the CAD-USD exchange rate and oil prices hasn’t always strong as it has apparently been over the past few years. Since I hadn’t been able to sort this problem out on my own, I went into last weekend’s session on this topic organised by the […]
The Bank of Canada’s job gets tougher
By any standard, the Bank of Canada has handled things very well over the past decade: inflation is low and stable, and employment rates have been at all-time highs over the past couple of years. But things are starting to get more complicated.
Yield curve and uncovered interest rate parity update
As a follow-up to this post, here are the US and Canadian yield curves from March 2006 and December 2005. The slopes haven’t changed much, but the US curve has shifted up at a faster rate than the Canadian yield curve. This is part of a trend that goes back at least 12 months: The […]
Waiting for the pass-through
There are two list prices of my copy of Freakonomics: $C 34.95 and $US 25.95. Yesterday’s closing CAD-USD exchange rate was 0.8642. This means that that if you had $C 30,000 handy, you could exchange that for $US 26,000, drive across the border, buy 1000 copies of Freakonomics, cross back again and sell them for […]
The Bank of Canada raised interest rates today
The overnight rate was increased 25 basis points to 3.75%. Information on the Canadian and global economies received since the January Monetary Policy Report Update has been broadly in line with the Bank’s expectations, although the Canadian dollar has recently moved above the range that had been assumed in the Update. Real gross domestic product […]
The Bank of Canada will raise interest rates tomorrow
The Bank of Canada has increased its target for the overnight rate by 25 basis points four times in a row, from 2.50% to 3.50%, and if its January monetary policy report is anything to go by, it seems intent on continuing this trend. Output continues to hover around the Bank’s estimate of capacity, and […]
TorStar Bad Economics Watch: I
There may be worse papers than the Toronto Star when it comes to economics reporting, but since it’s the one I’m most likely to read, it’s the one that gets most on my nerves. The Bank of Canada raised its target rate for the fourth time in a row last Tuesday (here’s why), and the […]
Yes, we should be worrying about the US yield curve
Jim Hamilton at Econbrowser offers a useful summary of some of the issues surrounding the recent inversion of the yield curve in the US. In the past, whenever long-term interest rates have dipped below short-term interest rates, there’s been a better-than-decent chance that a recession would follow. Brad DeLong explains why: Usually an inverted yield […]
CPI inflation slips out of the zone
Statistics Canada releases September CPI data: "In September, the CPI posted a 3.4% increase over September 2004." "On a monthly basis, the CPI All-items index rose by 0.9% in September. There have been only three increases of comparable magnitude over the past 15 years. Not since the introduction of the GST in January 1991, and […]
The Bank of Canada’s outlook for monetary policy
From the Monetary Policy Report, released today (summary here): Canada’s economic growth in the first half of the year was somewhat stronger than had been expected. Overall, the economy now appears to be operating at full production capacity… The base case … assum[es] energy prices consistent with current futures prices; a smooth and orderly resolution […]
Worthwhile Canadian Initiative 
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