The onset of the pandemic saw a high degree of coordination between our monetary and fiscal authorities. The Bank of Canada lowered its overnight rate to its effective lower bound and engaged in quantitative easing, governments pumped in stimulus and support programs, and the Office of the...

This paper addresses the debate in the literature on how developing countries are affected by foreign monetary policy shocks. I analyze how contractionary monetary policy shocks originating in different regions, specifically the Euro Area (“EU”) and United States (“US”), affect a set of...

The Bank of Canada should restore the important role of tracking the money supply as a predictor of future inflation and economic performance, according to a major new book on the conduct of monetary policy from the C.D. Howe Institute.In “Navigating Turbulence: Canadian Monetary Policy Since...

Over the past decade, inflation in many countries has been tepid, despite rock-bottom interest rates and different forms of unconventional stimulative monetary policy, including quantitative easing. For its part, Canada has averaged 1.5 percent inflation over this period, below the 2 percent...

For much of the past two decades, interest rates have fallen in Canada (and elsewhere). At the time of writing, however, with inflation well above the Bank of Canada’s 2 percent target, we are headed in the opposite direction. Where we will land over the long haul is unclear. However, it is...

The Bank of Canada’s balance sheet has undergone a radical transformation since the beginning of the pandemic. The Bank’s total assets more than quadrupled at their peak and still remain 3.5 times higher. The most radical change on the liabilities side has been the increase in settlement...

We analyze the link between monetary policy and the growth of shadow banks, and by extension, financial stability in Canada. Using monthly financial market data from 1991-2015 in a two-stage time-varying coefficient Bayesian vector autoregression approach, we find that greater shares of shadow...

The Bank of Canada should weigh how income inequality affects monetary policy effectiveness as it pursues its 2 percent inflation target, says a new report from the C.D. Howe Institute.In “Monetary Policy, Income Inequality, and Inflation — What's the Link?” authors Jeremy Kronick and...