Tiff Macklem acknowledges the Bank of Canada is losing money for first time

tiff macklem acknowledges the bank of canada is losing money for first time

Bank of Canada governor Tiff Macklem updated the House finance committee on the central bank’s balance sheet Wednesday.

Bank of Canada governor Tiff Macklem acknowledged Wednesday that the central bank is on track to lose money for the first time in its history.

Macklem said the Bank of Canada’s net interest income — the difference between interest revenue from assets and its cost of servicing liabilities — will soon turn negative, if it hasn’t already. He insisted, however, that the dynamic wouldn’t shake the central bank’s ability to conduct monetary policy and its decisions would be guided by its price and financial stability mandates.

“After a period of above-average income, our net interest income is now turning negative,” Macklem said in opening remarks to the House finance committee on Nov. 23. “Following a period of losses, the Bank of Canada will return to positive net earnings. The size and duration of the losses will ultimately depend on a number of factors, including the path of interest rates and the evolution of both the economy and the balance sheet.”

Macklem updated the committee on the balance sheet, noting that it peaked in March 2021 at $575 billion, and as of last week, had dropped to $415 billion — a decline of 28 per cent.

When the central bank launched its first foray into quantitative easing (or QE) at the onset of the pandemic, it was increasing the money supply by purchasing government bonds and other assets in an effort to stimulate the economy and keep borrowing accommodative by bringing rates to near-zero.

During that time, the Bank of Canada had been purchasing $5 billion worth of bonds a week until the end of 2020 before slowing its pace and then stopping altogether in October 2021.

Fast-forward to 2022. The Bank of Canada has raised the policy rate six times since March, taking the benchmark rate to 3.75 per cent from 0.25 per cent. Higher rates increase the interest payments the Bank of Canada pays on settlements it created to purchase financial assets during its QE campaign.

Most economists say the central bank’s financial circumstances shouldn’t cause a significant ripple through the economy and the institution isn’t in the business of making money in the first place.

The Department of Finance and Bank of Canada have yet to provide details on how they plan to address the issue, though Macklem said there needs to be a solution to this problem and expects that one is coming.

Macklem reiterated that the Bank of Canada’s focus remains trained on bringing price pressures back to balance, which the central bank expects to return to its two per cent target by the end of 2024.

“The Bank of Canada’s job is to ensure inflation is low, stable and predictable,” Macklem said. “We are still far from that goal. We view the risks around our forecast for inflation to be reasonably balanced. But with inflation so far above our target, we are particularly concerned about the upside risks.”

• Email: shughes@postmedia.com | Twitter: StephHughes95

Listen to Down to Business for in-depth discussions and insights into the latest in Canadian business, available wherever you get your podcasts . Check out the latest episode below:

News Related

OTHER NEWS

Dutch man who harassed B.C. teenager Amanda Todd returned to the Netherlands

Dutch man who harassed B.C. teenager Amanda Todd returned to the Netherlands The man convicted of harassing and extorting British Columbia teenager Amanda Todd has been returned to the Netherlands, ... Read more »

'They don't make men like Steve Kanellakos anymore': Mixed reaction among councillors to city manager's abrupt resignation

City manager Steve Kanellakos announced his resignation with immediate effect on Monday. Ottawa city councillors say they didn’t see the sudden resignation of city manager Steve Kanellakos coming, and their ... Read more »

Witnesses failed to save pregnant woman who was beaten to death: Cops

Clarissa Winchester was killed in Marietta earlier this month. The vicious beating death of a 22-year-old pregnant woman in South Carolina could have been avoided had witnesses intervened, according to ... Read more »

Chronic pain research centre asks for resignation of retired general behind controversial speech

Retired Lt.-Gen. Michel Maisonneuve criticized everything from the removal of historical statues and apologies to victims to government climate change policies in a speech he made after accepting a top ... Read more »

Storm brings arctic chill, heavy snow and punishing winds to parts of coastal B.C.

VANCOUVER — Snowfall, winter storm and arctic outflow warnings now cover most of coastal British Columbia from Terrace south to Metro Vancouver as a powerful storm packing frigid winds is ... Read more »

College Football World Reacts To Texas Quarterback Transfer

AUSTIN, TX – SEPTEMBER 02: Texas Longhorns fans celebrate the start of the fourth quarter against the Maryland Terrapins at Darrell K Royal-Texas Memorial Stadium on September 2, 2017 in ... Read more »

Stittsville's Turcotte family spreading Christmas cheer for all to hear with Elf-theme display

Shawn Turcotte and his family have turned their home at 18 Cypress Gardens in Stittsville into an Elf-themed fundraiser for charity. Son of a Nutcracker! The Turcottes have done it ... Read more »

Ford government plans to appeal after Ontario court strikes down Bill 124

Registered practical nurses, PSWs, hospital cleaners and others held a news conference and delivered postcards to the Ontario government calling for the repeal of Bill 124 in February. The Ford ... Read more »

Canadian dollar hits 3-week low as domestic demand softens

FILE PHOTO: A Canadian dollar coin, commonly known as the “Loonie”, is pictured in this illustration picture taken in Toronto TORONTO (Reuters) – The Canadian dollar weakened to its lowest ... Read more »

The curious case of a 'triple-dip' La Niña in a warming world

The planet is gearing up for a “triple-dip” La Niña this winter. This is only the third time that has happened since the 1950s. Typically during La Niña years in ... Read more »

City says pay-per-tip black cart system would be too costly to implement

Pictured is a black bin used for garbage collection in a back alley in the community of Sunnyside on Monday, September 14, 2020. For nearly five years, the City of ... Read more »

Federal Express plane catches fire at Calgary International Airport; crew escapes safely

FILE PHOTO: A Federal Express plane is parked at Toronto Pearson International Airport on Feb. 3, 2020. Federal officials are investigating the cause of a fire that broke out on ... Read more »

Meghan And Harry's Bombshell Netflix Documentary Finally Has A Release Date

Meghan Markle and Prince Harry posing Just months after Prince Harry and Meghan Markle decided to depart from royal life, the pair signed a contract with Netflix in September 2020 ... Read more »

Residents, supporters of Winnipeg's Lions Place call on province to step up before sale of building completed

Residents of one of the largest non-profit housing complexes in Manitoba say the fate of their building — which could be sold to an Alberta firm as early as January ... Read more »

Raptors takeaways: Pascal Siakam, O.G. Anunoby shaping team identity

Well, that was fast. A quarter of the 2022-23 NBA season has already been played, and the Toronto Raptors are 11-9 through 20 games. Given that many people expected the ... Read more »

Wounded Pulisic sends United States through to last 16 with win over Iran

U.S. forward Christian Pulisic scores his team’s first goal against Iran. DOHA — Christian Pulisic could not even celebrate scoring against Iran after he injured himself as the United States ... Read more »

McConnell says Trump is 'highly unlikely to ever be elected president' amid furor over dinner with Ye and white supremacist Nick Fuentes

Senate Minority Leader Mitch McConnell of Kentucky. AP Photo/J. Scott Applewhite McConnell on Tuesday blasted former President Trump’s Mar-a-Lago dinner with Nick Fuentes and Ye. “There is no room in ... Read more »

Hilton hotel opens at former waterfront Radisson after $25 million investment

A grand opening was held for the new DoubleTree by Hilton Windsor Hotel & Suites on Tuesday, November 29, 2022. Windsor Mayor Drew Dilkens, left, and hotel owner Shmuel Farhi ... Read more »

Look: USC Football Could Be Adding A Huge Transfer

TEMPE, AZ – NOVEMBER 09: A USC Trojans helmet on the field before the college football game between the USC Trojans and the Arizona State Sun Devils on November 9, ... Read more »

Got a bucket? Speed up the composting process with bokashi

Got a bucket? Speed up the composting process with bokashi It’s no secret that the key to healthy plants is healthy soil, and the best way to improve soil is ... Read more »

Request for proposals issued for new Civic hospital campus

A 2021 file image of design plans for the new Civic campus of The Ottawa Hospital shows the main entrance area and a research facility. The new Civic campus of ... Read more »

McCarthy on Trump dinner with white nationalist: Nobody should be spending time with Nick Fuentes

McCarthy on Trump dinner with white nationalist: Nobody should be spending time with Nick Fuentes Minority Leader Kevin McCarthy (R-CA) chastised former President Donald Trump on Tuesday for dining with ... Read more »

WATCH: Kevin Mccarthy Denounces Trump Meeting With Kanye Literally Two Seconds After Saying Kanye Fine, Fuentes Bad

House Minority Leader Kevin McCarthy denounced former President Donald Trump’s bombshell Mar-a-Lago dinner with anti-Semitism-spouting entertainer/entrepreneur Kanye West seconds after saying meeting Ye was within bounds but white supremacist Nick Fuentes was unacceptable. ... Read more »

Viral Video of Cat in Istanbul Clothing Store Comes With a Sweet Surprise

This is so amazing! It’s common knowledge that the kind people of Istanbul are amazingly wonderful to their feral cat population, and residents place food and water bowls outside their homes ... Read more »

Energy Department’s head of spent nuclear fuel on leave after alleged felony theft at airport

Energy Department’s head of spent nuclear fuel on leave after alleged felony theft at airport The Energy Department’s official in charge of spent nuclear fuel is on leave after being ... Read more »

Suncor says it will not sell Petro-Canada retail business

FILE PHOTO: Suncor Energy facility is seen in Sherwood Park, Alberta (Reuters) – Canada’s Suncor Energy Inc said on Tuesday it will retain the Petro-Canada gas station retail business following ... Read more »

Kevin McCarthy says Democrats could select the next speaker if Republicans 'play games' on the House floor

House Minority Leader Kevin McCarthy of California. AP Photo/John Locher McCarthy said Republicans could cede control of the House in January if they aren’t unified. While on Newsmax, the Californian ... Read more »

Inaugural police board meeting for new chief, mayor ends in disruption, arrest

Ottawa’s new mayor and police chief got an earful from members of the public at their first Ottawa Police Services Board meeting Monday — before it ended abruptly due to disruptions. At one point, some public ... Read more »

Neurology Professors Just Listed the 9 Worst Habits for the Human Brain

Father working in home office with young daughter on shoulders Especially following the worst phase of a pandemic, maybe you embrace the idea of aging with more open arms than ... Read more »

France's Mbappe favourite to win Golden Ball

Kylian Mbappe of France looks on during the FIFA World Cup Qatar 2022 Group D match between France and Denmark at Stadium 974 on November 26, 2022 in Doha, Qatar. ... Read more »

Council approves largest-ever Transit Windsor investment

A Transit Windsor bus is seen on Ouellette Avenue on Friday, Nov. 25, 2022. City council has approved the largest-ever investment in Transit Windsor history despite what activists and some ... Read more »

Ancient giant sea turtle with never-before-seen features found in Europe, scientists say

Long ago, gigantic marine turtles swam the Earth’s seas. Until recently, these prehistoric giants, reaching lengths of over 3 meters (10 feet) from head to tail, had been thought to ... Read more »

Bell customers in Oromocto, Lincoln subject to repeated outages due to 'vandalism'

Services may take until 11 p.m. Tuesday to be restored, according to Bell communications. People in Oromocto and Lincoln have been facing repeated outages with their Bell services since at least ... Read more »

NFL World Is Celebrating Russell Wilson On Tuesday

SEATTLE, WASHINGTON – SEPTEMBER 12: Russell Wilson #3 of the Denver Broncos passes during the first quarter against the Seattle Seahawks at Lumen Field on September 12, 2022 in Seattle, ... Read more »

Here's How Much Mar-a-Lago Is Worth if Trump Sells It

Former US President Donald Trump, arrives to speak at the Mar-a-Lago Club in Palm Beach, Florida, on November 15, 2022 and an aerial view of former U.S. President Donald Trump’s ... Read more »

Breaking: Big Ten Program Fires 3 Coaches On Tuesday

EVANSTON, IL – SEPTEMBER 10: A general view of Ryan Field before the Northwestern Wildcats take on the Illinois State Redbirds on September 10, 2016 in Evanston, Illinois. Illiinois State ... Read more »

Opinion: A looming oil and gas emissions cap threatens prosperity and security

Federal Minister of the Environment and Climate Change Steven Guilbeault speaks during a news briefing, at the COP27 climate summit in Red Sea resort of Sharm el-Sheikh, Egypt, November 19, ... Read more »

Kevin McCarthy's excuses for Donald Trump don't check out

A week after Donald Trump dined with White nationalist and Holocaust denier Nick Fuentes, House Minority Leader Kevin McCarthy finally addressed the controversy. Here is what he told reporters after ... Read more »

Massive Cruise Ship Suite Is Truly an 'Introvert's Paradise'

It even has two stories. A cruise vacation can be a tough sell for a serious introvert. Most major cruise ships are booked out with thousands of other passengers crowding ... Read more »

Congress poised to avoid crippling rail strike, enraging workers

Congress poised to avoid crippling rail strike, enraging workers Congress is poised to end the threat of a rail strike after President Biden called on lawmakers to force through a ... Read more »
Breaking thailand news, thai news, thailand news Verified News Story Network