Interest rates
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The Neutral Rate in Canada: 2018 Estimates
The neutral nominal policy rate serves as a benchmark for assessing the degree of monetary stimulus and provides a medium- to long-run anchor for the policy rate. Since quantitative measures of the neutral rate are subject to considerable uncertainty, Bank staff rely on four different approaches to estimate the Canadian neutral rate. -
Ambiguity, Nominal Bond Yields and Real Bond Yields
Equilibrium bond-pricing models rely on inflation being bad news for future growth to generate upward-sloping nominal yield curves. We develop a model that can generate upward-sloping nominal and real yield curves by instead using ambiguity about inflation and growth. -
Interest Rate and Renewal Risk for Mortgages
In this note, we explore two types of risk faced by holders of mortgages and home equity lines of credit (HELOCs) in the context of rising interest rates: interest rate risk and renewal risk. -
May 31, 2018 A Progress Report on the Economy
Deputy Governor Sylvain Leduc discusses the issues that led Governing Council to hold the policy interest rate at 1.25 per cent in their May 30 decision. -
May 16, 2018 The (Mostly) Long and Short of Potential Output
Deputy Governor Lawrence Schembri discusses the importance of potential output to monetary policy, as well as policy challenges and opportunities in a world of low potential output growth. -
May 1, 2018 Canada’s Economy and Household Debt: How Big Is the Problem?
Governor Poloz talks about household debt and how it will affect Canada’s economy and monetary policy for years. -
How to Manage Macroeconomic and Financial Stability Risks: A New Framework
Monetary policy decisions need to consider all potential outcomes, not just the most likely path for the economy. This is especially true in the presence of elevated financial system vulnerabilities, which lead to increased downside risks for future growth. -
The Macroeconomic Effects of Quantitative Easing in the Euro Area: Evidence from an Estimated DSGE Model
This paper estimates an open-economy dynamic stochastic general equilibrium model with Bayesian techniques to analyse the macroeconomic effects of the European Central Bank’s (ECB’s) quantitative easing (QE) programme. Using data on government debt stocks and yields across maturities, we identify the parameter governing portfolio adjustment in the private sector. -
Which Model to Forecast the Target Rate?
Specifications of the Federal Reserve target rate that have more realistic features mitigate in-sample over-fitting and are favored in the data. -
The Impacts of Monetary Policy Statements
In this note, we find that market participants react to an unexpected change in the tone of Canadian monetary policy statements.