Monetary Policy Council
The C.D. Howe Institute Monetary Policy Council is comprised of 12 of Canada’s most distinguished financial-market and monetary economists. Co-chaired by William B.P. Robson, the Institute’s President and CEO, and Jeremy Kronick, Vice-President of Economic Analysis and Strategy, it provides the Bank of Canada, financial-market participants, and economic policy commentators with a regular independent assessment […] Munn, Manley and Duncan – Short-sighted Capital Gains Changes Will Bring Long-Term Consequences
From: Duncan Munn, John Manley and Dwight Duncan To: Finance Minister Chrystia Freeland Date: April 30, 2024 Re: Short-sighted Capital Gains Changes Will Bring Long-Term Consequences  This month’s federal budget asks the wealthiest among us to pay for spending initiatives to address intergenerational fairness. A better way to finance new spending would be to arrest and reverse Canada’s growth and […]Kronick, Ambler – No Rate Cut Yet. Here’s Why There Should Have Been
To: Interest rate watchers From: Jeremy M. Kronick and Steve Ambler Date: April 26, 2024 Re: No Rate Cut Yet. Here’s Why There Should Have Been The latest data indicate that the battle against inflation is almost over. Despite this, the Bank of Canada again held its policy rate at 5 percent this month. What gives? The Bank, like many other central […] As the Bank of Canada resists rate cuts, is it falling behind the curve again? – Globe and Mail
The latest data (from February) indicate that the battle against inflation is almost over. Despite the encouraging inflation data, the Bank of Canada again held its policy rate at 5 percent on Wednesday. What gives? The bank, like many other central banks, was slow off the mark to raise rates as inflation took off. We worry it runs the risk of falling behind the curve again.
First, let’s examine why the bank might be hesitating to cut – the housing market and fiscal policy. Then, let’s examine why, in our view, that’s not enough.
Year-over-year headline inflation dropped inside the bank’s 1-3 percent range in January, and continued to fall in February, sitting at 2.8 percent. Core inflation, which strips out more volatile…
Jeremy Kronick on BNN – If the BoC waits too long to cut rates, it may fall behind the curve
Jeremy Kronick, Associate Vice President and director of the Centre on Financial and Monetary Policy, joins BNN Bloomberg to discuss the path for rate cuts in Canada, inflation and the fiscal policy.
C.D. Howe Institute Monetary Policy Council Calls for Bank of Canada to Hold Overnight Rate at 5.00 Percent, Cut to 3.50 Percent by April 2025
April 4, 2024 – The C.D. Howe Institute’s Monetary Policy Council (MPC) calls for the Bank of Canada to maintain its target for the overnight rate, its benchmark policy interest rate, at 5.00 percent at its next announcement on April 10th. The MPC further calls for the Bank to lower the target to 4.75 at the following announcement in June, on the way to a target of 3.50 percent by April of 2025.
The MPC provides an independent assessment of the monetary stance consistent with the Bank of Canada’s 2…
Kronick, Ambler, Bafale – New Tools to Analyze the Real Economy
To: Canada’s Economic Policymakers From: Jeremy M. Kronick, Steve Ambler and Mawakina Bafale Date: March 28, 2024 Re: New Tools to Analyze the Real Economy The C.D. Howe Institute’s mission is to raise living standards by fostering economically sound public policies, including in the areas of monetary policy and financial stability. In order to make informed policy recommendations, we […] Tell-tale Signals: A Customized Toolkit for Tracking the Economy
To make informed decisions, policymakers need reliable and robust economic data, and researchers at the C.D. Howe Institute have created many unique data sets for their analyses and recommendations over the years. This Commentary brings together some novel data series from previous C.D. Howe Institute studies to provide third parties, including the Bank of Canada, […] Kronick, Ambler – No Rate Cut Yet. Here’s Why
To: Interest rate watchers From: Jeremy M. Kronick and Steve Ambler Date: March 13, 2024 Re: No Rate Cut Yet. Here’s Why Headline inflation in January moved back into the Bank of Canada’s 1 to 3-percent target range. Yet last week, the Bank again held steady on its overnight rate. Why is the Bank reluctant to cut? There are […]The case for an April interest-rate cut by Tiff Macklem – Globe and Mail
Headline inflation in January moved back into the Bank of Canada’s 1- to 3-per-cent target range. Yet on Wednesday, the bank again held its target for the overnight rate at 5 per cent.
Why is the bank reluctant to cut? There are two main impediments: core inflation, and concerns over expectations. Both are fair reasons to keep rates where they are, but both measures are easing or should ease soon. An April rate cut may therefore be in the cards.
The bank’s mandate is to target 2-per-cent headline inflation. But headline inflation contains a number of volatile items, such as energy, and so to get a sense of underlying price pressures, many central banks have measures of core inflation that strip away these components…
C.D. Howe Institute Monetary Policy Council Calls for Bank of Canada to Hold Overnight Rate at 5.00 Percent, Cut to 3.50 Percent by March of 2025
February 29, 2024 – The C.D. Howe Institute’s Monetary Policy Council (MPC) recommends that the Bank of Canada maintain its target for the overnight rate, its benchmark policy interest rate, at 5.00 percent at its next announcement on March 6th. The MPC further recommends that the Bank keep the target at 5.00 percent in April, before reducing it to 4.50 percent by September and to 3.50 percent by March of 2025.
The MPC provides an independent assessment of the monetary stance consistent with the Bank of…