May 14, 1998 Bank of Canada Review - Spring 1998 Cover page Papal Testone of Innocent XI Called a testone, this silver coin is about the size of a Canadian two-dollar piece and forms part of the National Currency Collection at the Bank of Canada. Photography by James Zagon. Content Type(s): Publications, Bank of Canada Review
May 13, 1998 Canada-U.S. long-term interest differentials in the 1990s Bank of Canada Review - Spring 1998 Kevin Clinton Long-term Canada-U.S. interest spreads have changed remarkably during the 1990s. The unusually wide spreads of the first half of the decade have given way to an unprecedented run of negative yield differentials. In this article, the author examines the conceptual aspects of yields on international assets and their application to the Canada-U.S. situation. Prior to 1995, investors were unsure that, over the long run, inflation would meet the targets set by the government and the Bank. Policy credibility was undermined by large budget deficits and political uncertainty. In the second half of the decade, confidence was re-established as the fiscal positions of governments improved, long-run price stability became established, and political concerns about Quebec lessened. As long as these fundamentals hold, long-term rates should remain relatively low, even when short-term rates rise. Content Type(s): Publications, Bank of Canada Review articles Topic(s): Financial markets, Interest rates, International topics
May 13, 1998 Monetary Policy Report – May 1998 Canada’s inflation-control targets establish a specific medium-term objective for monetary policy. Content Type(s): Publications, Monetary Policy Report
May 13, 1998 Release of the Monetary Policy Report Opening statement Gordon Thiessen This morning we released our seventh Monetary Policy Report. Since the release of our last Report in November, there have been an unusual number of international and domestic developments which have had important economic and financial consequences. Among the most important events have been the crisis in Asia, declines in commodities prices, and the persistent […] Content Type(s): Press, Speeches and appearances, Opening statements
May 13, 1998 Bank of Canada Governor comments on release of the Monetary Policy Report Media Relations Bank of Canada Governor Gordon Thiessen today commented on the release of the semi-annual Monetary Policy Report, which discusses current economic trends and their implications for monetary policy. Content Type(s): Press, Press releases
May 12, 1998 Measurement biases in the Canadian CPI: An update Bank of Canada Review - Spring 1998 Allan Crawford The consumer price index (CPI) is used to measure changes in the price level of consumer goods and services. As an indicator of changes in the cost of living, it is susceptible to various types of measurement biases. This article provides estimates of the size of these biases in the Canadian CPI. It concludes that the rate of increase in the CPI probably overstates the rate of increase in the cost of living by about 0.5 percentage points per year. Content Type(s): Publications, Bank of Canada Review articles Topic(s): Inflation and prices
May 11, 1998 The use of forward rate agreements in Canada Bank of Canada Review - Spring 1998 Jean-Yves Paquette, David Stréliski In this article, the authors identify forward rate agreements, or FRAs, as short-term interest rate guarantee instruments negotiated by two parties, one of which is typically a bank. In outlining the main features of FRAs, the authors contrast them with BAX contracts (futures contracts on bankers' acceptances that are negotiated through the Montreal Exchange). The article then describes how market participants use FRAs to cover short-term interest rate risk. The final section deals with the way the Bank of Canada uses information from the FRA market as an indicator of interest rate expectations. Econometric models used to retrieve information from FRA rates, as well as the underlying assumptions, are discussed in an appendix. Content Type(s): Publications, Bank of Canada Review articles Topic(s): Financial markets, Monetary and financial indicators
May 1, 1998 Information in Financial Asset Prices Proceedings of a conference held by the Bank of Canada, May 1998 (proceedings volume, available in electronic format only) Content Type(s): Conferences and workshops
April 23, 1998 Opening Statement before the Standing Senate Committee on Banking, Trade and Commerce Opening statement Gordon Thiessen Standing Senate Committee on Banking, Trade and Commerce My colleagues and I look forward to our yearly appearance before your committee because it gives us an opportunity to present an account of how the Bank has worked to fulfil its objectives over the past year. It is also an opportunity for a discussion with you on a range of economic and monetary issues. […] Content Type(s): Press, Speeches and appearances, Opening statements
Uncertainty and Multiple Paradigms of the Transmission Mechanism Staff Working Paper 1998-7 Walter Engert, Jack Selody An important challenge facing central banks is making decisions under uncertainty about the dynamic effects of monetary policy actions. The authors stress the importance of explicitly recognizing uncertainty about the transmission mechanism when formulating policy advice. They argue that one way to manage monetary policy under uncertainty is to draw on both an output-gap paradigm […] Content Type(s): Staff research, Staff working papers Topic(s): Monetary policy and uncertainty, Monetary policy framework JEL Code(s): E, E5