It looked like a puzzle: As the COVID-19 pandemic spread, central banks—including the Bank of Canada—quickly cut interest rates to cushion the blow. But rates on new mortgages didn’t decline much, and some actually went up. Why?
Remember that your lender’s funding cost determines most of the mortgage rate. The cost of funding jumped in the early days of the pandemic as investors became nervous. Many simply wanted to hold on to their cash given how uncertain everything was. So, the funding that is normally easy for lenders to get slowed to a trickle. This drove up the funding cost, even as the Bank of Canada’s policy interest rate fell.
The Bank of Canada has taken many steps to help financial markets work better during the pandemic, along with the federal government and other public

Opening Statement

Senate National Finance Committee

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Good afternoon, Mr. Chairman and committee members. Senior Deputy Governor Wilkins and I welcome the opportunity to appear before you to discuss the Bank of Canada’s actions in response to the coronavirus pandemic.
Since the pandemic began, the Bank has had two goals in mind. In the short term, we have been working to help Canadian households and businesses bridge the crisis period. Our longer-term goal is to provide a

University of Alberta’s Eric J. Hanson Memorial Lecture

In the days and weeks since the COVID-19 pandemic came to Canada, the Bank of Canada has been taking action to ensure our economy and financial system are weathering the unprecedented shock of the shutdown.

Timothy Lane

CFA Society Winnipeg and the Manitoba Association for Business Economics

Opening Statement

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Good morning, and thank you for being with us today. Senior Deputy Governor Wilkins and I are glad to have the opportunity to discuss the latest issue of the Bank of Canada’s Financial System Review (FSR), which we published today.
The traditional purpose of the FSR is to identify key vulnerabilities in the financial system that can interact with and magnify economic events. Today, we are facing an extreme event in the form of the COVID-19 pandemic. This FSR gives an in-depth analysis of the impact of

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The Bank of Canada’s Annual Report for 2019 was tabled in the House of Commons today. The Report will be available at 14:00 (ET) on the Bank’s website. 
For more information, please contact at 613-782-8782.

Remarks

C.D. Howe Institute

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It’s a pleasure to participate in the C.D. Howe webcast today. I wish the circumstances were better.
So much has happened so quickly. In the early days of March—just eight weeks ago—Canada had fewer than 30 COVID-19 cases and no community transmission. Now there are almost 60,000 cases.
It will be a while before I forget where I was at the outset of all this: Baltimore at a G7 meeting of deputies from finance ministries and central banks. We

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The Directors of the Bank of Canada, appointed under Section 9 of the Bank of Canada Act, today announced that they have appointed Tiff Macklem as Governor of the Bank of Canada for a seven-year term, effective 3 June 2020. Mr. Macklem will succeed Stephen S. Poloz, who is leaving the Bank of Canada on 2 June 2020.
"After pursuing an exhaustive domestic and international selection process for this crucial role, I’m delighted to say that Tiff Macklem has the exceptional qualities to fulfil

Opening Statement

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Let me begin by thanking the directors for conducting an extensive and thorough search for the tenth Governor of the Bank of Canada. They have done an outstanding job in selecting the next leader to run this important institution.
The past seven years have been incredibly rewarding professionally and personally, and equally challenging. I want to thank all Board members, present and past, for their support, and Minister Morneau for his leadership and friendship these past few years.
It is bittersweet for

Opening Statement

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As Lead Director, I have chaired the Special Committee of the Bank of Canada’s independent directors, which, in accordance with the Bank of Canada Act, has been responsible for recruiting the next Governor of the Bank of Canada.
The members of the Special Committee have appointed Tiff Macklem as the Governor of the Bank of Canada effective June 3, 2020 for a seven-year term.
The Bank is an independent Crown corporation that is ultimately owned by the people of Canada and accountable to them.  Its mandate

Opening Statement

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To the Minister of Finance and Board of Directors of the Bank, thank you for selecting me as the tenth Governor of the Bank of Canada. It is a privilege and an honour.
I am looking forward to returning to the Bank and working alongside the distinguished members of the Governing Council and the Bank’s first-rate staff. The Bank’s employees have always been its greatest strength, and thanks to their efforts, the institution is considered as one of the world’s leading and trusted central banks. That reputation

Remarks

Ivey Business School

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Good afternoon. Let me begin by thanking Dean Hodgson for the invitation to be with you today. I wish it were under better circumstances.
The events of the past few weeks clearly fit the definition of a “teachable moment” in my field, which is central banking. It is very worthwhile to think about them now when things are still fresh—indeed, so fresh that the episode is still in motion.
I will set the scene very briefly. When I returned to the

Opening Statement

House of Commons Standing Committee on Finance

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Good afternoon, Mr. Chairman and committee members. Senior Deputy Governor Wilkins and I welcome the opportunity to appear before you to discuss the Bank’s policy actions in response to the coronavirus pandemic, as well as our Monetary Policy Report (MPR), which we published yesterday.
The Canadian economy is experiencing a significant and rapid contraction. The shock is a global one, affecting all

Opening Statement

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Good morning. Senior Deputy Governor Wilkins and I are glad to have the opportunity to answer your questions about today’s policy announcement and Monetary Policy Report (MPR). Allow me to begin with a few comments.
The Canadian economy is experiencing a significant and rapid contraction. The shock is a global one, affecting all countries, but commodity-producing countries like Canada are being hit twice. In the very near term, policy-makers can do little more than cushion the blow.
It is worth spending a

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The Bank of Canada today maintained its target for the overnight rate at ¼ percent, which the Bank considers its effective lower bound. The Bank Rate is correspondingly ½ percent and the deposit rate is ¼ percent. The Bank also announced new measures to provide additional support to Canada’s financial system.
The necessary efforts to contain the COVID-19 pandemic have caused a sudden and deep contraction in economic activity and employment worldwide. In financial markets, this has driven a

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Canada’s economy faces two significant shocks—the plunge in global oil prices and the impact of the COVID-19 pandemic.

During this time of heightened public health measures intended to limit the transmission of COVID-19, some consumers and businesses are choosing not to use cash to limit potential exposure. The Bank recognizes that these measures are being taken with the safety and well-being of both staff and consumers in mind.
Cash acceptance
We encourage Canadians to use the method of payment that they are the most comfortable with. However, the Bank strongly advocates that retailers continue to accept cash to ensure Canadians have access to the goods and services they need. Refusing cash purchases outright will put an undue

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The Bank of Canada today welcomed the move by a number of Canadian banks, including the six largest, to draw on its new Standing Term Liquidity Facility (STLF).
“It is good to see Canada’s banks using this new standing facility,” Bank of Canada Governor Stephen S. Poloz said. “It was designed to be used, and their participation shows that this facility is a helpful addition to our liquidity tool kit. I encourage all eligible Canadian banks to access the STLF to maintain the flow of credit to Canadian households and businesses.”
The Canadian Bankers Association issued a statement saying that nine banks,

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The Bank of Canada announced today that it successfully launched its new Standing Term Liquidity Facility (STLF).
“Given the current challenges in funding markets, the Bank of Canada encourages Canadian financial institutions to use the STLF to support the liquidity needs of their clients,” said Governor Stephen S. Poloz. 
The STLF is one of several facilities the Bank of Canada has put in place to support liquidity in the financial system. Under the STLF, eligible financial institutions can borrow from the Bank of Canada by pledging a broad set of collateral, including mortgages. This improves their

Opening Statement

Good morning, and thank you for joining Senior Deputy Governor Wilkins and me to discuss today’s interest rate decision. Before turning to your questions, let me briefly summarize today’s announcements.
First, we have lowered our target for the overnight rate by 50 basis points to ¼ percent. This unscheduled rate decision brings the policy rate to its effective lower bound, to provide support to the Canadian financial system and to the economy during the COVID-19 pandemic.
The government has announced decisive fiscal actions to defend Canadians and the economy from the damaging effects

FOR IMMEDIATE RELEASE

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The Bank of Canada today lowered its target for the overnight rate by 50 basis points to ¼ percent. The Bank Rate is correspondingly ½ percent and the deposit rate is ¼ percent. This unscheduled rate decision brings the policy rate to its effective lower bound and is intended to provide support to the Canadian financial system and the economy during the COVID-19 pandemic.
The spread of COVID-19 is having serious consequences for Canadians and for the economy, as is the abrupt decline in

Consistent with the direction from G7 Leaders, we are taking action and enhancing coordination on our dynamic domestic and international policy efforts to respond to the global health, economic, and financial impacts associated with the spread of the coronavirus disease 2019 (COVID-19). Collectively, G7 nations have already enacted a wide-ranging set of health, economic, and financial stability measures.  We will do whatever is necessary to restore confidence and economic growth and to protect jobs, businesses, and the resilience of the financial system.  We also pledge to promote global trade and investment to underpin prosperity.
Our nations are