Bank of Canada not ruling out cut to 0-0.25% before April 15th, or QE/helicopter money/etc. | General financial discussion | Discussion forum

Doug said
The Bank of Canada governor has confirmed that they're not ruling out further cuts to the Policy Interest Rate in advance of the April 15th meeting. They're also not ruling out implementing quantitative easing—that is, the buying of corporate or government bonds or other securities, including ETFs like Japan's central bank—before or after the April 15th meeting. No discussion on negative interest rates, but safe to say, it's being talk about between BoC and federal government.

As well, they're not ruling out helicopter money, either.

In sum, I now expect the following:
- BoC rate to go to 0% on or before April 15th;
- QE and/or helicopter money or negative interest rates to occur at some point this year; and,
- the new top tier HISA rate will be 1-1.25% by June.

Cheers,
Doug  

As predicted,

The Bank of Canada has maintained its 0.25% Policy Interest Rate.

Also, as predicted, the Bank of Canada has initiated not only an investment grade corporate bond purchase program, on the secondary market, but also a program to purchase bonds of Canada's provinces of up to $50 billion—at least initially. This may include purchases of many municipal bonds in Canada since many provinces issue the municipal bonds on behalf of the municipalities (i.e., Alberta, British Columbia, and others).

Somewhat surprisingly, they've increased the $5 billion per week purchase of Government of Canada securities, which includes Canadian mortgage bonds, though they've no longer specified an upper week purchase limit.

Next up: I predict the Bank of Canada will eventually purchase corporate bond funds and, once the economy restarts, to provide stimulus, to ETFs generally.

Although the closely followed Policy Interest Rate was not decreased (it didn't have far to go, and it's not clear how 0.25% would help), please keep in mind the past PIR cuts have not been fully priced in yet, especially at the virtual banks and credit unions. Thus, I am predicting, in terms of HISA base rates...
- a further 0.50-1.00% cut in rates between now and the end of the year.
In terms of GIC rates, with the added market stabilization and liquidity moves, I am predicting...
- further 0.25-0.50% cuts to rates, at the virtual banks and credit unions, between now and the end of the year, across all or most maturities, as the bond market will now be more stabilized and have a guaranteed marginal buyer in the Bank of Canada.

Cheers,
Doug