• 2020-04-30 17:37

    By Greg Quinn

    OTTAWA (MNI) - Bank of Canada Governor Stephen Poloz said Thursday an outsized response to Covid-19 is justified including historic balance sheet growth aimed at avoiding a deflationary shock.

    Buying up government and corporate debt worth more than 10% of Canada's GDP was needed as markets threatened to seize up and starve the economy of cash to sustain activity and relief programs, Poloz said. Cutting interest rates to about zero does little to aid the economy while most stores are closed, so that move was aimed more at preparing for a recovery he hopes can be quick and robust.

    Without the purchases Poloz said "a credit crunch would ensue, and that would create a significant downdraft in the economy -- in effect, a deflationary shock.

  • 2020-04-30 12:49

    By Greg Quinn

    OTTAWA (MNI) - Canadian Prime Minister Justin Trudeau said Thursday his priority is ensuring a strong economic recovery over a report the government is heading for a record budget deficit.

    "For the time being, we are focused on what we have to do now to get Canadians through this crisis. We are lucky to have one of the lowest debt to GDP ratios" among major economies, Trudeau said at a press conference in Ottawa.

    The deficit will equal 12.7% of GDP in the fiscal year that began April 1 according to a report from the parliamentary budget office Thursday, the highest in modern-day records back to the 1960s.

  • 2020-04-30 09:17

    By Greg Quinn

    OTTAWA (MNI) - Following is the text of the BOC's provincial bond purchase program, published Thursday from Ottawa.

    The Provincial Bond Purchase Program (PBPP) aims to support the liquidity and efficiency of provincial government funding markets. It supplements the Provincial Money Market Purchase Program (PMMP). The asset manager for this program is BMO Global Asset Management. The amount of debt purchased for any given eligible issuer will factor in the share of the issuer's debt outstanding as well as the issuer's share of Canada's GDP.

    Terms and conditions See the full terms and conditions for this program.

    Primary dealers for Government of Canada marketable bonds as listed on the Bank of Canada website are eligible to participate in the PBPP.

  • 2020-04-29 06:00

    By Greg Quinn

    OTTAWA (MNI) - Companies aren't expecting deflation in Canada even as its major oil producers struggle with a price collapse and demand generally is hit by shutdowns linked to the coronavirus pandemic.

    The view of firms polled by the Canadian Federation of Independent Business is more optimistic than the central bank's April 15 projections that the 12-month inflation rate could remain negative into early next year in a worst-case scenario. Policy makers declined to give a regular forecast, but said consumer prices would likely stall this quarter.

    The CFIB poll published Wednesday had an average pricing estimate over the next year of 1.2%, still within the BOC's target range of 1% to 3%.

  • 2020-04-28 15:31

    By Greg Quinn

    OTTAWA (MNI) - Canadian Prime Minister Justin Trudeau said Tuesday the country's 10 provinces have agreed to common guidelines on re-openings after COVID-19 shutdowns, potentially heading off the kind of strife seen in the U.S.

    Trudeau cautioned about the need to move slowly and referenced things happening over weeks instead of days to avoid reversing the progress so far in slowing the spread of a virus that has killed almost 2,800 Canadians.

  • 2020-04-24 17:18

    By Greg Quinn

    OTTAWA (MNI) - The Bank of Canada's balance sheet grew to a fresh record on Friday, while growth in asset purchases slowed even with Governor Stephen Poloz working on programs to buy provincial and corporate bonds.

    Assets climbed CAD28.2 billion to CAD349 billion as of April 22, less than the previous week's CAD45.1 billion increase.

    Policy makers on April 15 said they could increase plans to buy at least CAD5 billion a week in federal debt, and holdings of federal bonds and t-bills both increased by around CAD8 billion this week. The BOC has made asset purchases the focus of any new stimulus by affirming the current 0.25% overnight borrowing rate is the effective lower bound and pledging to do whatever is needed to stabilize markets.

  • 2020-04-21 14:39

    --April May Be Worse As Shutdowns, Oil Collapse Continue

    OTTAWA (MNI) - Canada's inflation rate likely slowed to 1.1% in March with the biggest drop in more than a decade led by collapsing oil prices and business shutdowns linked to the COVID-19 pandemic.

    Consumer price gains will slow by half from February's 2.2% according to the MNI economist median, around the bottom of the BOC's 1%-3% target range. The inflation rate hasn't declined that much since a 1.4pp drop in September 2006.

    "We expect a similar deceleration in April before CPI bottoms out near 0% y/y in May," Toronto-Dominion Bank economists wrote in a research note.

  • 2020-04-17 15:25

    By Greg Quinn

    OTTAWA (MNI) - The Bank of Canada's balance sheet grew to a fresh record of CAD320 billion this week and is poised to balloon further after policymakers committed to buy up to CAD60 billion of provincial government and corporate bonds.

    The central bank said Friday that assets on April 15 climbed from CAD275 billion a week earlier. Assets on the central bank's balance sheet have now more than doubled from CAD154 billion three weeks ago, far more than during the global financial crisis.

    This week's increase was again led by repo agreements, to CAD143 billion from CAD111 billion.

  • 2020-04-16 16:08

    By Greg Quinn

    OTTAWA (MNI) - Following is BOC Governor Stephen Poloz's opening statement Thursday to the House of Commons Finance Committee:

    Good afternoon, Mr. Chairman and committee members. Senior Deputy Governor Wilkins and I welcome the opportunity to appear before you to discuss the Bank's policy actions in response to the coronavirus pandemic, as well as our Monetary Policy Report (MPR), which we published yesterday.

    The Canadian economy is experiencing a significant and rapid contraction. The shock is a global one, affecting all countries, but commodity-producing countries like Canada are being hit twice.

  • 2020-04-15 11:42

    (MNI) - The following are three announcements by the Bank of Canada on Wednesday to buy provincial bonds, corporate bonds and ramp up its treasury bill purchases.

    Bank of Canada to Introduce a Provincial Bond Purchase Program

    The Bank of Canada today announced its intention to introduce a Provincial Bond Purchase Program (PBPP) to further support the liquidity and efficiency of provincial government funding markets.

    This program will supplement the already-implemented Provincial Money Market Purchase Program.