Bank of Canada says getting closer to point where QE will not be needed By Reuters

0
26
© Reuters. FILE PHOTO: Bank of Canada Governor Tiff Macklem arrives to a news conference in Ottawa, Ontario, Canada December 15, 2020. REUTERS/Blair Gable/File Photo

OTTAWA, Sept 9 (Reuters) – The Canadian economy is moving closer to a point where the Bank of Canada will no longer need to continue adding stimulus through its quantitative easing (QE) program, but it is not there yet, Governor Tiff Macklem said on Thursday.

Macklem, in a speech the day after the central bank held its key rate at 0.25%, said it would eventually move to a reinvestment phase, where it bought only enough bonds to replace those that are maturing. This maintains stimulus but does not add new stimulus.

When the time comes to start reducing the amount of stimulus, the Bank will start doing so by hiking rates, said Macklem, noting the reinvestment phase would continue until at least the first hike.

“As the recovery progresses, we are moving closer to a time when continuing to add stimulus through QE will no longer be necessary. We are not there yet,” Macklem said.

“It is reasonable to expect that when we reach the reinvestment phase, we will remain there for a period of time, at least until we raise the policy interest rate,” he said.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.