The Bank of Canada announced today that it will not renew the $1 billion term PRA maturing on 26 June.

This decision reflects the continuing improvement in market conditions since the end of April, including funding conditions out to three months. Indicative measures of bank funding costs (such as the spread between the 3-month CDOR and the expected overnight rate as measured by 3-month overnight index swaps) remain well below those in a number of other major currencies. The results of recent term PRA operations, including the narrow spread between the high and low yields accepted, the wide range of securities used in the operations, and the contraction in the spread between the average yield received and the OIS rate, are consistent with this assessment.

The Bank of Canada remains committed to provide liquidity in support of the efficient functioning of financial markets as needed. The case for further operations, including a decision regarding the July 10 term PRA maturity, will be reviewed in light of conditions in financial markets.