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Gravelle: The end of quantitative tightening and what comes next
Good afternoon. Thank you, Tanya, for the kind introduction. And thank you to VersaFi for hosting this event. The Bank of Canada’s balance sheet has been larger than normal for a few years now. That’s because of the role it played during the COVID-19 crisis, in making sure financial markets could work properly and in setting the economy on a path to recovery. As we began to emerge from the worst of the pandemic, we ended quantitative easing (QE) in October 2021. Six months later, in April 2022, we started shrinking the balance sheet through quantitative tightening (QT), a process that continues today. Under QT, ... (full story)
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Back to normal for the balance sheet
video During the COVID-19 pandemic, the Bank’s balance sheet expanded by a lot. This is because of the emergency measures we took early in the crisis to make sure financial markets continued to function, and then because we used quantitative easing, or QE, to help the economy recover. In April 2022, we started shrinking our balance sheet using a process called quantitative tightening, or QT. Since then, our balance sheet has shrunk by a lot because our settlement balances—or central bank reserves—have declined. Settlement balances are now close to where we want them to be, which is in the range of $50 billion ... (full story)
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BOC'S GRAVELLE: WE WILL NEED TO RESTART OUR NORMAL-COURSE ASSET PURCHASES GRADUALLY, AND WELL BEFORE SEPTEMBER
— First Squawk (@FirstSquawk) January 16, 2025
BOC'S GRAVELLE: WE WILL NOT BE ENDING QT OUT OF ANY CONCERN ABOUT FUNCTIONING OF REPO MARKETS; WE THINK OTHER FACTORS ARE CAUSING THESE PRESSURES
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BOC'S GRAVELLE: WHILE QT IS ALMOST FINISHED, THE COMPOSITION OF OUR ASSET HOLDINGS WON'T BE BACK TO NORMAL FOR QUITE SOME TIME
— First Squawk (@FirstSquawk) January 16, 2025
BOC'S GRAVELLE: GOC BOND PURCHASES WILL LIKELY NOT START UNTIL TOWARD THE END OF 2026 AT THE EARLIEST
BOC'S GRAVELLE: T-BILL PURCHASES WILL TAKE PLACE…