Ambler, Kronick – Why the Bank of Canada Should Have Kept Its Finger on Pause

The Bank of Canada shouldn’t have hiked interest rates this week – Globe and Mail Op-Ed

Steve Ambler is professor of economics, Université du Québec à Montréal and David Dodge Chair in Monetary Policy at the C.D. Howe Institute, where Jeremy Kronick is director, monetary and financial services research.

Amid conflicting signals, the Bank of Canada decided to press the brakes on the economy a little harder this week, raising the overnight target rate by 25 basis points to 4.75 per cent. And with that, the conditional pause the Bank of Canada announced in January ends. We aren’t so sure it should have.

First, the case for the hike.

The year-over-year increase in the Consumer Price Index (headline inflation), rose in April from March, from 4.3 to 4.4 per cent – the first…

There’s a way to break inflation without breaking the economy – Financial Post Op-Ed

What triggered the sharp rise in Canadian inflation in spring 2021 is still a matter of debate. And it’s a debate that matters: the relative importance of the pandemic’s disruption of supply chains, Russia’s invasion of Ukraine, “greed,” or central banks’ financing of a surge in government spending will affect our response to future events. But once inflation gets started the initial causes are less important than the process that sustains it, which is a combination, on the one hand, of rising inflation expectations and costs and, on the other, of inadequate production.

When inflation has been low and stable — say two per cent — for some time then everyone knows that everyone knows that inflation will be about two per…

Kronick, Ambler – Slaying the Beast: The Bank of Canada’s Inflation Fight

More hikes likely, the BoC should consider more active QT: Former BoC deputy governor John Murray

BoC could make same mistake as ECB did in 2008 if it hikes rates today: Ed Devlin

C.D. Howe Institute Monetary Policy Council Calls for Bank of Canada to Hold Overnight Rate at 4.50 Percent through December, Cut to 4.00 Percent by June of 2024

June 1, 2023 – The C.D. Howe Institute’s Monetary Policy Council (MPC) recommends that the Bank of Canada hold its target for the overnight rate, its benchmark policy interest rate, at 4.50 percent on June 7th, and keep it at that level for the next six months. By June of 2024, the Council recommends a cut to 4.00 percent.

The MPC provides an independent assessment of the monetary stance consistent with the Bank of Canada’s 2 percent inflation target. William Robson, the Institute’s CEO, chairs the Council.

Council members make recommendations for the Bank of Canada’s upcoming interest-rate announcement, the subsequent announcement, and the announcements six months and one year ahead. The Council’s formal…

Jeremy Kronick on BNN – BoC says Inflation, Financial Stress Affecting Rate Plans

Jeremy Kronick, Director of Monetary and Financial Services Research at the C.D. Howe Institute, recently joined BNN Bloomberg to discuss Bank of Canada Governor Tiff Macklem’s speech on balancing inflation with systemic risks.

Jeremy Kronick on BNN – Lessons learned from the Bank of Canada and U.S. Federal Reserve’s inflation fight so far

Jeremy Kronick, Director of Monetary and Financial Services Research at the C.D. Howe Institute, recently joined BNN Bloomberg to talk about the lessons learned from the Bank of Canada’s inflation fight and how it differs from the U.S. Federal Reserve.

Slaying the Beast: The Bank of Canada’s Ongoing Battle with Inflation

Did the U.S. financial crisis make the Bank of Canada’s job easier? – Financial Post Op-Ed

Last week, the Bank of Canada held its overnight rate, its benchmark policy rate, at 4.5 per cent. No surprises there. In its last announcement, the bank told us the data were consistent with their view that, with the target rate where it is, inflation would come back down to three per cent by the middle of this year. Data since have not changed governing council’s view that at present more tightening wasn’t necessary.

In fact, if anything, the major economic development over the last six weeks, the failures of Silicon Valley Bank (SVB) and Signature Bank, as well as the emergency takeover of Credit Suisse by UBS Group AG, made caution even more prudent. Furthermore, it might actually make the…

Are Interest Rates Now High?