Bank of Canada

50-Basis Point Central Bank Rate Hike in Canada and More Tightening to Come

October 26, 2022

Today’s 50-basis point increase of the Bank of Canada‘s overnight rate target to 3.75% follows five consecutive hikes since March totaling three percentage points. More rate hikes will follow, and quantitative tightening to reverse some of the balance sheet growth during the pandemic will also continue. Although indicators of long-term expected inflation remain fairly well-anchored, […] More

Bank of Canada Rate Hike

September 7, 2022

The Bank of Canada Board engineered an as-expected 75-basis point rate hike to 3.25%. This was the fifth increase since March from a pandemic base of 0.25%. The rate level is at a 14-year high, and more increases and continuing quantitative restraint lie ahead. According to a statement, “The effects of COVID-19 outbreaks, ongoing supply […] More

A Busy Wednesday as Central Banks Compete with Data for Market Attention

September 7, 2022

Dollar strength continues, with another 20-year high touched overnight by the weighted DXY index. At 144.98, the dollar climbed 1.4% overnight and to its highest Japanese yen value since August 1998 when the Asian debt crisis was raging. The greenback also has advanced 0.8% versus sterling and 0.3% vis-a-vis the Canadian, Australian and New Zealand […] More

Bank of Canada Beats Expectations with a 100-Basis Point Rate Hike that May Foreshadow the Fed’s Next Move

July 13, 2022

The fourth Canadian central bank rate hike of 2022 followed earlier increases of 25 basis points in March and 50-basis point moves in April and June. The new 2.5% rate level is 75 basis points above the pre-pandemic level of 1.75%. All three 50 basis point cuts in 2020 had been implemented near the start […] More

Bank of Canada Interest Rate Doubled to 1.0%, More Hikes and Balance Sheet Reduction to Come

April 13, 2022

Today’s 50-basis point rate hike, although widely expected, was an historic move. Such represents the first hike of that much by a Group of Seven central bank and the Bank of Canada’s largest incremental rise since 2000. Officials had only recently ended its pandemic relief program of bond purchases to support liquidity and now has […] More

Overnight Canadian Policy Interest Rate Undergoes First Post-Pandemic Hike

March 2, 2022

A trio of 50-basis point rate cuts in March 2020 had lowered the overnight rate to an effective low of 0.25%. From April 2020 through the end of October 2021, monetary easing was supplemented by a program of bond purchases, and maturing bonds have until now continued to be reinvested. As widely expected, the policy […] More

Watching Developments in Ukraine and Awaiting Round One of Fed Chairman Powell’s Semi-Annual Humphrey-Hawkins Testimony

March 2, 2022

The high point of last night’s U.S. State of the Union address were the inspiring remarks about Russia’s invasion of Ukraine and challenge such poses to democracy around the world. On domestic policy issues, President Biden took a deconstructed approach to the bundled package that failed to pass congress, and he cited several broad issues […] More

Bank of Canada Drops Exceptional Forward Guidance that Had Committed Keeping Policy Rate at 0.25% Until Around Mid-2022

January 26, 2022

While keeping the central bank’s overnight policy rate at 0.25%, Bank of Canada officials today made a substantial modification in the forward-looking part of their released statement. Previous statements including that after last year’s final policy review on December 8 had promised to “hold the policy interest rate at the effective lower bound until economic […] More

Quieter Day: Omicron Developments Still Encouraging

December 8, 2021

Omicron news continues to be reassuring. Booster shots appear to reduce rate of transmission, and the symptoms of this Covid variant seem less severe than with the Delta Variant. The most notable financial market development today has been a large rise in Continental European ten-year sovereign debt yields, for instance, of 10 basis points  in […] More

Bank of Canada Ends Bond Purchase Stimulus and Signals Slightly Earlier Interest Rate Lift-Off Timing

October 27, 2021

Canada’s policy interest rate has been at 0.25% since a trio of 50-basis point reductions in March 2020. While significant progress has been achieved toward economic and labor market recovery, that task has not yet been sufficiently completed. Various areas of the labor market are not yet all the way back to pre-pandemic conditions. Canada’s […] More