We consider two trade-offs inherent to extraordinary forward guidance (EFG): potency versus flexibility, and the credibility of forward guidance versus the credibility of inflation targeting.We argue that the form of EFG used by the Bank of Canada during the COVID‑19 pandemic balanced both...

We use Canadian data to examine how monetary policy affects house prices and the consumer price index for rent (CPI-rent) through exogenous changes in the mortgage interest rates. Nationwide, tighter monetary policy lowers house prices but raises CPI-rent, likely due to higher user costs for...

Previous research suggests that lower-income Canadians may have unique experiences with the use of payments, including the use of cash and digital payments. We conduct a case study using data from the Canadian Financial Diaries (CFD) project to gain insight into how some lower-income Canadians...

Recent advances in artificial intelligence (AI) have revived expectations of transformative productivity gains and large‑scale labour‑market disruption. Yet despite rapid improvements in AI capabilities, aggregate productivity growth in advanced economies remains subdued, and widespread job...

This note examines how monetary policy responses to shelter inflation affect both the overall economy and different households. We find that the aggregate macroeconomic effects of responding to shelter inflation are modest, whereas the redistributive consequences across households are...

This paper introduces CLONE (Classification Of News), a method that decomposes asset price movements into four types of macroeconomic news-aggregate demand, productivity, inflation, and monetary policy-based on joint changes in prices of stocks, bonds, and inflation swaps. CLONE's simplicity and...

The Governor's Challenge (GC) by the Bank of Canada marked its tenth year as a successful outreach and education initiative, designed to strengthen public understanding of macroeconomics and monetary policy. Since its launch in 2015-16, the competition has engaged more than 30 universities from...

We develop an approach to quantify transaction costs in the repo market using OTC transaction data, where quoted bid-ask spreads are not observable. By estimating effective spreads at the level of individual trades, we construct a novel metric to evaluate intermediation costs across different...

This paper describes the organization of the market for trading Government of Canada (GoC) bonds. We outline the role of investment dealers in intermediating trading, distributing GoC securities and providing liquidity across the yield curve. We describe the key features of GoC bond trading and...

Mortgage debt represents over 70% of all Canadian household financial liabilities, and the performance of these debts is critical to the health of the financial system. We explore the relationships between mortgage arrears and key macroeconomic fundamentals such as labour market variables,...