Search

External Deputy Governor Michelle Alexopoulos discusses what we know so far about AI adoption, and what it could mean for productivity and labour markets in Canada.

As the holiday season approaches, our attention turns naturally to the home front. Accordingly, my comments this afternoon will focus on households. I would like to concentrate in particular on the implications of Canadian household finances for financial stability in our country.

From the initially careful references to data that suggested a slowing of the rate of decline in global activity, the use of the term "green shoots" has quickly evolved.

This monthly newsletter features the latest research publications by Bank of Canada economists including external publications and working papers published on the Bank of Canada’s website.

The Bank of Canada today held its target for the overnight rate at 5%, with the Bank Rate at 5¼% and the deposit rate at 5%.

The war in the Middle East has pushed up inflation around the world and is weighing on global economic activity. But oil prices have fallen from their peak, and inflation is expected to ease. Investment in AI is boosting global growth.

The Bank of Canada today announced that it is lowering its target for the overnight rate by one-quarter of one percentage point to 2 3/4 per cent.

The sharp depreciation of the Canadian dollar and the successful launch of the euro have sparked a lively debate in Canada about the possible benefits of formally adopting the U.S. dollar as our national currency. Some observers have suggested that this debate is largely irrelevant, since Canada is already highly "dollarized." Canadian businesses and households, they assert, often use the U.S. dollar to perform standard money functions in preference to their own currency. Very little evidence has been provided, however, to support these claims. The authors review the available data with a view to drawing some tentative conclusions about the extent to which Canada has already been informally dollarized. The evidence suggests that many of the concerns that have been expressed about the imminent demise of the Canadian dollar have been misplaced. The Canadian dollar continues to be used as the principal unit of account, medium of exchange, and store of value within our borders. Moreover, there is no indication that dollarization is likely to take hold in the foreseeable future. Indeed, in many respects, the Canadian economy is less dollarized now than it was 20 years ago.

We conduct surveys to study how consumer spending responds to higher inflation expectations. Most respondents spend the same, sticking to fixed budget plans or not considering inflation for spending decisions. About 20% decrease spending because they feel poorer and cut spending to invest in inflation-proof assets. Very few increase spending.

Senior Deputy Governor Tiff Macklem has announced that he will resign from the Bank of Canada next spring to become Dean of University of Toronto’s Rotman School of Management.