Interest rates

• How Do Mortgage Rate Resets Affect Consumer Spending and Debt Repayment? Evidence from Canadian Consumers

  Staff Working Paper 2020-18 Katya Kartashova, Xiaoqing Zhou

  We study the causal effect of mortgage rate changes on consumer spending, debt repayment and defaults during an expansionary and a contractionary monetary policy episode in Canada. We find asymmetric responses of consumer durable spending, deleveraging and defaults. These findings help us to understand household sector response to interest rate changes.

  Content Type(s): Staff research, Staff working papers Topic(s): Credit and credit aggregates, Interest rates, Monetary policy, Monetary policy transmission JEL Code(s): D, D1, D12, D14, E, E4, E43, E5, E52, G, G2, G21, R, R3, R31

• Learning, Equilibrium Trend, Cycle, and Spread in Bond Yields

  Staff Working Paper 2020-14 Guihai Zhao

  This equilibrium model explains the trend in long-term yields and business-cycle movements in short-term yields and yield spreads. The less-frequent inverted yield curves (and less-frequent recessions) after the 1990s are due to recent secular stagnation and procyclical inflation expectations.

  Content Type(s): Staff research, Staff working papers Topic(s): Asset pricing, Financial markets, Interest rates JEL Code(s): E, E4, E43, G, G0, G00, G1, G12

• A Portfolio-Balance Model of Inflation and Yield Curve Determination

  Staff Working Paper 2020-6 Antonio Diez de los Rios

  How does the supply of nominal government debt affect the macroeconomy? To answer this question, we propose a portfolio-balance model of the yield curve in which inflation is determined through an interest rate rule.

  Content Type(s): Staff research, Staff working papers Topic(s): Asset pricing, Debt management, Inflation and prices, Interest rates, Monetary policy JEL Code(s): E, E4, E43, E5, E52, G, G1, G12, H, H6, H63
• March 6, 2020

  Evaluating our approach to monetary policy

  

  James (Jim) C. MacGee, Rhys R. Mendes

  Inflation targeting has been successful in Canada over the past 30 years. But is it the best we can do? The Bank of Canada asks itself, and Canadians, that question every five years.

  Content Type(s): Publications, The Economy, Plain and Simple Topic(s): Credibility, Inflation targets, Inflation: costs and benefits, Interest rates, Monetary policy framework, Price stability
• March 5, 2020

  Labour market is key to Canada’s resilience

  Speech summary Stephen S. Poloz Women in Capital Markets Toronto, Ontario

  Governor Stephen S. Poloz talks about how the labour market is a key source of resilience for Canada’s economy and reviews the Bank of Canada’s decision to lower interest rates. 

  Content Type(s): Press, Speeches and appearances, Speech summaries Topic(s): Coronavirus disease (COVID-19), Interest rates, Labour markets, Monetary policy, Recent economic and financial developments
• March 5, 2020

  Economic Progress Report: We All Have Work to Do

  Remarks Stephen S. Poloz Women in Capital Markets Toronto, Ontario

  Governor Stephen S. Poloz discusses the Bank’s latest interest rate announcement as well as Canada’s labour market—an important source of economic resilience.

  Content Type(s): Press, Speeches and appearances, Remarks Topic(s): Coronavirus disease (COVID-19), Interest rates, Labour markets, Monetary policy, Recent economic and financial developments

• The Effect of Mortgage Rate Resets on Debt: Evidence from TransUnion (Part I)

  Staff Analytical Note 2020-2 Katya Kartashova

  This note studies how decreases in mortgage rates affect the behaviour of borrowers in terms of spending on durable goods and repaying debt.

  Content Type(s): Staff research, Staff analytical notes Topic(s): Credit and credit aggregates, Housing, Interest rates, Monetary policy, Monetary policy transmission JEL Code(s): D, D1, D12, D14, E, E4, E43, E5, E52, G, G2, G21, R, R3, R31

• The Power of Helicopter Money Revisited: A New Keynesian Perspective

  Staff Discussion Paper 2020-1 Thomas J. Carter, Rhys R. Mendes

  We analyze money financing of fiscal transfers (helicopter money) in two simple New Keynesian models: a “textbook” model in which all money is non-interest-bearing (e.g., all money is currency), and a more realistic model with interest-bearing reserves.

  Content Type(s): Staff research, Staff discussion papers Topic(s): Credibility, Economic models, Fiscal policy, Inflation targets, Interest rates, Monetary policy, Monetary policy and uncertainty, Monetary policy framework, Monetary policy transmission JEL Code(s): E, E1, E12, E4, E41, E43, E5, E51, E52, E58, E6, E61, E63
• February 5, 2020

  Securing prosperity is up to all of us

  Speech summary Carolyn A. Wilkins Economic Club of Canada Toronto, Ontario

  Senior Deputy Governor Carolyn A. Wilkins explains that Canada is well-positioned to secure prosperity and avoid a long period of slow growth if we take the right steps.

  Content Type(s): Press, Speeches and appearances, Speech summaries Topic(s): Business fluctuations and cycles, Fiscal policy, Interest rates, International topics, Monetary policy framework, Potential output, Productivity
• February 5, 2020

  Our Economic Destiny: Written in R-stars?

  Remarks Carolyn A. Wilkins Economic Club of Canada Toronto, Ontario

  Senior Deputy Governor Carolyn A. Wilkins talks about how to navigate slow growth and discusses the types of policies that would help secure long-term prosperity.

  Content Type(s): Press, Speeches and appearances, Remarks Topic(s): Business fluctuations and cycles, Fiscal policy, Interest rates, International topics, Monetary policy framework, Potential output, Productivity