Category: Economic

Canada’s economic progress has been driven by its historical preference for openness to people, capital and trade, Bank of Canada Governor Stephen S. Poloz said today.

In a speech marking both the 150th anniversary of Confederation and the 50th anniversary of Durham College, Governor Poloz looked at Canada’s economic history and showed how all periods of substantial progress have been characterized by openness in these three areas. “The bottom line of our history is that openness and economic progress go hand in hand,” Governor Poloz said.

While support for openness has ebbed and flowed over the years depending on circumstances, Canada’s economic roots have meant that a preference for openness has tended to re-emerge, the Governor said. For example, the colonies that united at Confederation benefited from open trading with the United States before 1867. When they lost free access to the US market, Confederation became the strategy they employed to help the economy develop.

Canada’s ascent also depended on people who understood the need for infrastructure to get resources to market, and how to attract the investment to finance these projects. “The people who developed what has become the world’s soundest banking system were vital to Canada’s development,” the Governor said. Open markets, foreign investment and immigration remain absolutely critical for Canada today, Governor Poloz said.

Fears of openness are heightened during times of economic stress, the Governor added. However, experience has shown that such fears are misplaced.

“Our history shows that it takes a world to raise a nation, and nation building works best in an environment of openness for trade, people and investment,” Governor Poloz said. “Our openness has helped us build a nation that I believe is the best place to live in the world. Imagine what we can build over the next 150 years.”

The Bank of Canada today announced the winners of its Scholarship and Work Placement Program, which is designed to assist Indigenous students and students with disabilities in furthering their education. The program reflects the Bank’s commitment to the diversity of people, ideas and disciplines and encourages young Canadians to consider employment in fields related to the work of the central bank.

The four successful applicants in 2016-2017 are as follows:

• Jérôme Archambault, a third-year PhD student in economics, currently studying at the University of Ottawa
• Boyce Campbell, a first-year commerce student, currently studying at Saint Mary’s University
• Grant Sorensen, a fourth-year commerce student, currently studying at the University of British Columbia
• Isabelle Truchon, a second-year statistics student, currently studying at Université Laval

“Diverse perspectives, skills, and talents are needed to help Canada adjust to the demands of an ever-evolving economy,” said Governor Stephen S. Poloz. “I look forward to seeing these students help the Bank navigate important economic challenges and opportunities in the years to come.”

Governor Poloz also noted that the scholarship recipients represent universities in four different provinces. “I’m delighted by the national reach this program is already having in just its second year,” he said.

The program awards a scholarship of $4,000 per year, renewable for up to four years, for tuition costs. The four students will also have the opportunity to participate in a paid summer or part-time work placement at the Bank of Canada. Both undergraduate and postgraduate students enrolled full-time at a Canadian academic institution were eligible to apply.

For more information on the Scholarship and Work Placement Program, please visit our website or email Scholarship@bankofcanada.ca.

The Bank of Canada today began publishing new data on the foreign exchange (FX) rate for 26 currencies, intended for statistical, analytical and informational purposes only. As previously announced, these new FX rates will be published once a day, by 16:30 Eastern time (ET), in the form of a single indicative rate per currency pair, which represents a daily average rate for that currency against the Canadian dollar.

To allow time for users of the Bank’s FX rates to make any necessary adjustments, the Bank will continue to publish existing FX rates alongside these new FX rates from 1 March to 28 April 2017. This means that, during this period, the following will continue to be posted at their usual times: noon and closing exchange rates, high and low FX rates for a given period, and all forward exchange rates and forward points.

To accommodate the new rates, the Exchange Rate section of the Bank’s website will be reformatted, and some data will be relocated. The URLs of the existing FX tools will, however, remain the same.

As of 1 May 2017, the Bank will publish the new exchange rate data, as described above, for the 26 currencies only. At that time, it will cease publishing new data for all other existing exchange rates, including noon and closing, high and low, and all forward exchange rates and forward points. The Bank will continue to publish monthly and annual averages for the new FX rates as well as for the Canadian-dollar effective exchange rate index (CERI). Past exchange rate data under the old methodology will remain archived on the Bank’s website.

For more information, consult the associated calculation methodology and background information documents.

Additional notes

1. In February 2016, the Bank announced its intention to make a series of changes to the number, frequency and calculation methodology of its published FX rates. These changes reinforce the distinction between FX rate fixings used as benchmarks for transactional purposes and Bank of Canada exchange rates that are provided as a public good—for statistical, analytical and informational purposes only.

2. Changes to the FX rates published by the Bank of Canada are being implemented after wide public consultation (including almost 17,000 responses to a 2014 survey) and are being undertaken in the context of broader international official sector work on the design of FX reference rates.

3. The Bank began publishing exchange rates when FX markets were much less transparent than they are now. Over time, the emergence of electronic trading platforms has greatly improved pricing transparency for both market participants and the broader public. Exchange rates are now readily available, either continuously (in real time) or at a specific point in time, from multiple trading platforms, Internet sources and data vendors.

4. The list of 26 currencies captures the vast majority of FX transactions conducted against the Canadian dollar and reflects the combination of the top 20 currencies by trading volume (based on the Bank for International Settlements triennial FX turnover survey) and those of Canada’s top 20 trading partners (based on Statistics Canada’s International Merchandise Trade Database). This list will be reviewed and adjusted, if required, every three years.

5. The 26 currencies to be published effective 1 March are (in alphabetical order)

6. Australian dollar	Peruvian new sol
   Brazilian real	Russian ruble
   British pound sterling	Saudi riyal
   Chinese renminbi	Singapore dollar
   European euro	South African rand
   Hong Kong dollar	South Korean won
   Indian rupee	Swedish krona
   Indonesian rupiah	Swiss franc
   Japanese yen	Taiwanese dollar
   Malaysian ringgit	Thai baht
   Mexican peso	Turkish lira
   New Zealand dollar	US dollar
   Norwegian krone	Vietnamese dong

The Bank of Canada today announced that it is maintaining its target for the overnight rate at 1/2 per cent. The Bank Rate is correspondingly 3/4 per cent and the deposit rate is 1/4 per cent.

CPI inflation rose to 2.1 per cent in January, reflecting higher energy prices due in part to carbon pricing measures introduced in two provinces. The Bank is looking through these effects, as their impact on inflation will be temporary. The Bank’s three measures of core inflation, taken together, continue to point to material excess capacity in the economy.

Overall, recent data on the global and Canadian economies have been consistent with the Bank’s projection of improving growth, as set out in the January Monetary Policy Report (MPR). In Canada, recent consumption and housing indicators suggest growth in the fourth quarter of 2016 may have been slightly stronger than expected. However, exports continue to face the ongoing competitiveness challenges described in the January MPR. The Canadian dollar and bond yields remain near levels observed at that time. While there have been recent gains in employment, subdued growth in wages and hours worked continue to reflect persistent economic slack in Canada, in contrast to the United States.

The Bank’s Governing Council remains attentive to the impact of significant uncertainties weighing on the outlook and continues to monitor risks outlined in the January MPR. In this context, Governing Council judges that the current stance of monetary policy is still appropriate and maintains the target for the overnight rate at 1/2 per cent.

Information note

The next scheduled date for announcing the overnight rate target is 12 April 2017. The next full update of the Bank’s outlook for the economy and inflation, including risks to the projection, will be published in the MPR at the same time.