Commentary The Bank of Canada recently announced it would maintain the overnight rate it charges commercial banks to borrow from the central bank at 0.5 percent, and maintain the rate it offers those banks to keep reserves at the central bank at 0.25 percent. The bank also said it was ending its program of quantitative easing (QE) and moving into a “reinvestment” phase where it will purchase Government of Canada bonds solely to replace maturing bonds at a still substantial rate of $4 billion to $5 billion per month. In effect, the bank will stop adding QE stimulus (which essentially prints new money, thereby growing the country’s money supply) but maintain the large stimulus it’s already injected into the economy, at least for the foreseeable future. In fact, it’s been gradually reducing the pace of QE purchases since October 2020. The major issue, of course, which has made headlines across …
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