Bank of Canada Governor Tiff Macklem says the central bank does not intend to actively sell bonds when embarking on its first ever quantitative tightening program.
Macklem, speaking to a business audience after raising interest rates 25 basis points earlier this week, did not give a time frame for starting quantitative easing, saying only that it “would be a natural next step” now that interest rates are moving higher.
“When we initiate QT, we will stop purchasing Government of Canada bonds. From that point forward, maturing government bonds will not be replaced when they roll of the balance sheet,” he said. “We do not intend to actively sell bonds.”
Currently, the Bank of Canada buys roughly $1 billion a week worth of government bonds to keep the size of its balance sheet constant.
Macklem added that the recent broadening in price pressures was a big concern and vowed that the central bank would use its monetary policy tools “with determination” to ensure that longer-term inflation expectations remain well anchored.
Inflation hit a 30-year high in Canada in January at 5.1%.
