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Essentials of Monetary Policy

Bank of Canada (BoC). Monetary Authorities Dial Back QE Purchases and Revise Their Inflation Forecasts Upwards

July 14, 2021
Mikhael Deutsch-Heng, Macroeconomist

As expected, the BoC tapered its weekly asset purchases by $1B, as the outlook for the Canadian economy continues to improve. Canada has still not experienced the increase in COVID-19 cases observed worldwide, and the vaccine rollout is going well. That said, there is still a lot of uncertainty, starting with the COVID-19 pandemic. Many highly vaccinated countries are currently dealing with a surge of COVID-19 cases; a similar situation in Canada would certainly affect the BoC’s forecasts. In addition, we consider that inflation risks are tilted to the upside, as there is still an imbalance between supply and demand for many goods and services