BoC Governor Tiff Macklem said in a speech yesterday, “as the recovery progresses, we are moving closer to a time when continuing to add stimulus through QE will no longer be necessary.” But, “we are not there yet,” he added. “Timing is a monetary policy decision that will depend on economic developments.”
BoC is still adding stimulus with the CAD 2B per week QE purchases. Macklem said, “when we get to the reinvestment phase, we will adjust the level of our bond purchases to maintain the Bank’s total holdings of Government of Canada bonds roughly stable”. The transition to the reinvestment phase will be “gradual” and will “proceed in measured steps”. The timing of changes will be guided by the “evolving assessment of the outlook”.
Also, the change in purchase pace is “distinct” to the decision on raising interest rates. “It is reasonable to expect that when we reach the reinvestment phase, we will remain there for a period of time, at least until we raise the policy interest rate,” he said.
