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In accordance with the schedule of term purchase and resale agreement (PRA) auctions announced on 6 March, the Bank of Canada announced today that it will conduct a 27-day term PRA operation as follows.

As indicated in the 22 September announcement, the Bank of Canada today releases the new schedule for Bank of Canada Term PRA liquidity operations commencing the week of 26 October 2009 and running through to the January 2010 Fixed Announcement Date.

Examination of progress in the Bank’s exploration of two alternatives to the current inflation-targeting framework: (i) lowering the inflation target and (ii) shifting to a price-level target; a review of arguments for and against price-level targeting, focusing on its costs and benefits compared with inflation targeting; assessing the merits of price-level targeting vis-à-vis inflation targeting from a debt-revaluation perspective; quantifying redistribution of wealth in Canada in the face of unexpected inflation.

The spread between long-term and short-term interest rates has proven to be an excellent predictor of changes of economic activity in Canada. As a general rule, when long-term interest rates have been much above short-term rates, strong increases in output have followed within about a year; however, whenever the yield curve has been inverted for any extended period of time, a recession has followed. Similar findings exist for other countries, including the United States. But although Canadian and U.S. interest rates generally move quite closely together, the Canadian yield curve has been distinctly better at predicting future Canadian output. The explanation given for this result is that the term spread has reflected both current monetary conditions, which affect short-term interest rates, and expected real returns on investment and expectations of inflation, which are the main determinants of long-term rates. This article is mainly a summary of econometric work done at the Bank. It also touches on some of the extensive recent literature in this area.

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Canada: The Phenix Bank, one dollar, 1837

This one-dollar note is part of the National Currency Collection, Bank of Canada.

Photography by James Zagon.

The underground economy in Canada has attracted increased attention over the past few years, yet there is no precise way to measure its size. Recent estimates vary between 4 per cent and 15 per cent of gross domestic product. This article provides an overview of measurement issues and recent estimates. It then focusses on the "monetary" approach to estimating the size of the underground economy. This approach is based on the assumption that the demand for bank notes provides a clue as to the size of the underground economy. The article concludes that estimates that use this approach must be viewed with considerable caution. They are based on a number of assumptions that are difficult to verify and that significantly affect the results.

A quarterly report of the Bank of Canada’s Governing Council, presenting the Bank’s base-case projection for inflation and growth in the Canadian economy, and its assessment of risks.

Consult our "blackout" guidelines for communications around fixed announcement dates.

The Bank of Canada, as Canada's central bank, is the ultimate source of liquid funds to the financial system. Learn about this role, known as “lender of last resort".

This paper examines the sale of durable goods by a monopolist in a stochastic partil equilibrium setting. It analyzes the responses of prices and output to various types of shocks and notes the differences with non-durable goods and competitive markets. It shows that behavior in this model with constant marginal costs of production is in […]