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Summary
- The Bank of Canada said on Tuesday that it has decided to reduce its Provincial Bond Purchase Program (PBPP).
- The top Canadian lender reportedly said that it will conduct the PBPP once a week instead of twice from now on.
- Bank of Canada governor Tiff Macklem, in a separate address on Tuesday, indicated that the top lender remains committed to its large-scale quantitative easing program.
The Bank of Canada (BoC) said on Tuesday, February 23, that it has decided to reduce its Provincial Bond Purchase Program (PBPP), as the provincial credit markets are performing better and no longer require as much support.
The top Canadian lender reportedly said that it will conduct the PBPP once a week instead of twice from now on.
The provincial bond-buying program was initiated last year in efforts to help improve market liquidity and efficiency in the markets for provincial governments amid the coronavirus pandemic.
Reports quoting Bank of Canada spokesperson Alex Paterson said that the decision to reduce its frequency was in line with the plan to gradually cut back on such programs which were introduced to stabilize the COVID-hit markets.
Bank of Canada’s Bond-Buying Programs
The central bank began purchasing government securities, or taking part in quantitative easing, last year in its efforts to boost the pandemic-struck Canadian economy. It indicated in January that it would cut back on the frequency of such purchases from the present level of C$ 4 billion per week as the economic recovery strengthens.
Bank of Canada governor Tiff Macklem, in a separate address on Tuesday, indicated that the top lender remains committed to its large-scale quantitative easing program.
Mr Macklem added that with the COVID vaccination program set to ramp up pace, the Canadian economy is likely to see a “sustained strong growth” in the second half of 2021 and into the following.
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However, a “complete economic recovery” is still some time away, he said. With that in mind, the central bank anticipates that the economic downturn will not be completely absorbed until 2023.
Mr Macklem also noted that in a post-COVID world, the economy will also be adjusting to “structural changes”. All these factors, he pointed, will result in an longer “protracted recuperation period”.
