OTTAWA (MaceNews) – The Bank of Canada left its policy rate unchanged, as expected, and stepped up its asset purchases to include provincial debt and corporate debt, the bank said Wednesday.
The bank said it will buy up to C$50 billion in provincial debt, and up to C$10 billion in corporate debt, the latter in the secondary market. It raised the amounts of its ongoing purchases of Canadian government debt, and enhanced its term repo lending facility. The bank said it was ready to raise and extend the duration of all its asset purchase programs “if needed.”
“Under its previously-announced program, the Bank will continue to purchase at least $5 billion in Government of Canada securities per week in the secondary market, and will increase the level of purchases as required to maintain proper functioning of the government bond market. Also, the Bank is temporarily increasing the amount of Treasury Bills it acquires at auctions to up to 40 percent, effective immediately.”
“The Bank is also announcing today the development of a new Provincial Bond Purchase Program of up to $50 billion, to supplement its Provincial Money Market Purchase Program. Further, the Bank is announcing a new Corporate Bond Purchase Program, in which the Bank will acquire up to a total of $10 billion in investment grade corporate bonds in the secondary market. Both of these programs will be put in place in the coming weeks. Finally, the Bank is further enhancing its term repo facility to permit funding for up to 24 months.”
“These measures will work in combination to ease pressure on Canadian borrowers. As containment restrictions are eased and economic activity resumes, fiscal and monetary policy actions will help underpin confidence and stimulate spending by consumers and businesses to restore growth. The Bank’s Governing Council stands ready to adjust the scale or duration of its programs if necessary. All the Bank’s actions are aimed at helping to bridge the current period of containment and create the conditions for a sustainable recovery and achievement of the inflation target over time.”