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April 12, 2023

Monetary Policy Report – April 2023

Monetary Policy Report – April
Inflation in Canada remains high but should come down quickly to around 3% in the middle of this year because of lower energy prices, improved supply chains and restrictive monetary policy. The Bank projects that inflation will reach the 2% target by the end of 2024.

Repo transaction costs and balance sheet frictions

Staff analytical paper 2026-10 Yanis Belkacem, Fabienne Schneider, Adrian Walton
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 segments of the market.
June 8, 2006

Floating Dollar, Anchored Inflation: The Role of the Exchange Rate in Canada's Monetary Policy Framework

Remarks Tiff Macklem Lunenburg Board of Trade Lunenburg, Nova Scotia
The two key components of the Bank's monetary policy framework are an "anchor," the inflation target, and a "float," the flexible exchange rate. Living by the ocean, you know better than I that a good mooring is one that keeps a boat in place, yet allows some give and take for the wind and the tide.
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