February 16, 2023
Exchange rates
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February 16, 2023
No two ways about it: Why the Bank is committed to getting back to 2%
Deputy Governor Paul Beaudry discusses the benefits of being near the Bank’s 2% inflation target and the dangers of straying from it for too long. -
February 7, 2023
Monetary policy at work
Bank of Canada Governor Tiff Macklem explains how recent interest rate increases work their way through the Canadian economy to slow demand and bring inflation down. -
February 7, 2023
Higher interest rates are working
Governor Tiff Macklem explains how the Bank of Canada’s increases to the policy interest rate will cool the economy and bring inflation down. -
Stress Relief? Funding Structures and Resilience to the Covid Shock
Funding structures affected the amount of financial stress different countries and sectors experienced during the spread of COVID-19 in early 2020. Policy responses targeting specific vulnerabilities were more effective at mitigating this stress than those supporting banks or the economy more broadly. -
Foreign Exchange Interventions: The Long and the Short of It
This paper studies the effects of foreign exchange (FX) interventions in a two-region model where governments issue both short- and long-term bonds. We find that the term premium channel dominates the trade balance channel in our calibrated model. As a result, the conventional beggar-thy-neighbor effects of interventions are overturned. -
May 12, 2022
The perfect storm
Deputy Governor Toni Gravelle discusses the commodity price shock and its implications for the Canadian economy and monetary policy. -
May 12, 2022
How commodity prices affect our economy
Deputy Governor Toni Gravelle talks about the spike in commodity prices over the past two years, the impact on inflation and how the Bank of Canada is responding. -
Exports and the Exchange Rate: A General Equilibrium Perspective
How do a country’s exports change when its currency depreciates? Does it matter which forces drive the exchange rate deprecation in the first place? We find that this relationship varies greatly depending on what drives exchange rate movements, and we conclude that the direct relationship between the exchange rate and exports is weak for Canada. -
Real Exchange Rate Decompositions
We break down the exchange rate based on an explicit link between fixed income and currency markets. We isolate a foreign exchange risk premium and show it is the main driver of the exchange rate between the Canadian and US dollars, especially on monetary policy and macroeconomic news announcement days.