As has been hotly debated by the market since the last policy meeting, the Central Bank of Canada (BOC) will begin to reduce easing in its monetary policy, in line with the growing economic recovery.
Most recently, BOC Deputy Governor Toni Gravelle said the central bank would halt the emergency liquidity program it used to launch markets when the coronavirus pandemic hit last year, including programs to buy government and private bonds.
Grovelle also gave an explanation of how the central bank plans to reduce its major government bond purchases and promised any reductions would be done gradually.
Last year, the BOC bought a minimum of $ 4 billion in federal government bonds per week to help keep borrowing costs low.
However, economists said that the purchase may no longer be necessary due to the outlook that the economy is growing at a stronger level than expected by BOC policymakers.
The Canadian dollar, which was supposed to profit from the central bank’s move to tighten policy, however, failed to capitalize on the opportunity to rise.
On the other hand, the currency depreciated lower due to the strengthening of the US dollar following risk-off sentiment in the market.
