From the start of the global credit crisis in August of 2007, the Bank of Canada responded to the challenges facing the Canadian financial system. To promote liquidity in the markets, and to alleviate funding pressures, the Bank of Canada initiated term lending facilities in late 2007. As conditions in funding markets improved, the term liquidity facilities were allowed to expire.
Meeting Monetary Policy Objectives
In response to the global financial crisis and the recession, the Bank of Canada lowered the target interest rate rapidly over the course of 2008 and early 2009 to its lowest possible level, established an operating framework for the implementation of monetary policy at the effective lower bound for the overnight rate and provided exceptional guidance on the future path of rates through its conditional commitment. To help ensure that it continued to hit its inflation target, the Bank also outlined a framework for quantitative and credit easing measures to lower longer-term borrowing rates.
With improvements in the economy, the Bank subsequently removed the conditional commitment, raised the overnight rate and re-established the standard operating framework for the implementation of monetary policy.
Bank of Canada Announces Extension of Expanded Swap Facility with U.S. Federal Reserve in coordination with other central banksThe Bank of Canada, the Bank of England, the European Central Bank, the Federal Reserve, and the Swiss National Bank today announced an extension of the existing temporary U.S. dollar liquidity swap arrangements through 1 August 2012.
The Federal Open Market Committee has authorized an extension through 1 August 2011, of its temporary U.S. dollar liquidity swap arrangements with the Bank of Canada, the Bank of England, the European Central Bank, the Bank of Japan, and the Swiss National Bank. The swap arrangements, established in May 2010, had been authorized through January 2011.