The Financial Post reports in its Wednesday edition that the Bank of Canada is working hard to avoid a taper tantrum when it eventually decides to slow its government bond purchases.
The Post's Kevin Carmichael writes that Toni Gravelle, a deputy governor, used a speech on Tuesday to further condition traders for the eventual end of quantitative easing (QE).
Mr. Gravelle emphasized that the shift -- when it comes -- will be gradual, soothing traders who might panic if the BOC were to remove itself as a major buyer of government debt too abruptly. Some analysts, including Bank of Montreal economist Benjamin Reitzes, think the BOC could start the process of scaling back its bond purchases as soon as April, because the recovery appears to be stronger than expected.
Mr. Gravelle said: "I want to be clear here: moderating the pace of purchases while adding to our holdings would simply mean that we are still adding stimulus through QE, but at a slower pace. It would not mean we are removing stimulus. We would be easing our foot off the accelerator, not hitting the brakes."
The BOC is currently sitting on a portfolio of financial assets worth about $575-billion, compared with $120-billion before the pandemic.
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