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Bank of Canada forecasting annual losses for the foreseeable future
November 27, 2022
1:01 pm
Doug
British Columbia, Canada
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Ostensibly owing to the fact that the majority of the Bank of Canada's balance sheet assets are low yielding Government of Canada bonds and the deposits Canadian banks and government institutions have with it are earning at least its Policy Interest Rate (3.75% currently), the Bank of Canada governor said recently in parliamentary testimony, it expects to report a significant net loss in its current fiscal year, and that it further expects to report annual losses for the "foreseeable future." The interesting thing, though, is the Bank of Canada has reportedly never had a net loss, before now anyway.

Of course, the Bank of Canada can control its own destiny, so to speak, and could always buy up higher yielding bonds and produce a profit, but doing so would be stimulative and inflationary, so the net losses are one unfortunate side effect of what needs to happen.

Cheers,
Doug

November 27, 2022
1:52 pm
canadian.100
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I think most of us knew that the Bank of Canada appears to have less than stellar management - we know that the BoC delayed far too long in raising rates to cool inflation and we will pay the price for a while. Disappointing to hear that this is the first time in history the BoC will report annual losses.

November 27, 2022
2:20 pm
Doug
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canadian.100 said
I think most of us knew that the Bank of Canada appears to have less than stellar management - we know that the BoC delayed far too long in raising rates to cool inflation and we will pay the price for a while. Disappointing to hear that this is the first time in history the BoC will report annual losses.  

I agree they likely were asleep at the switch for too long, but in this case, I'd be more concerned with incompetent BoC management if they actually adjusted monetary policy to produce a profit for the central bank. 🙂

Losses at the BoC are just that—paper losses, except with real money, but since they print the real money and the real money isn't tied to anything of real, tangible value, they have the ability to define its value. sf-cool

Cheers,
Doug

November 27, 2022
4:04 pm
rpotter28
Kingston, ON
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canadian.100 said
we know that the BoC delayed far too long in raising rates to cool inflation and we will pay the price for a while. Disappointing to hear that this is the first time in history the BoC will report annual losses.  

I totally AGREE. What's happening now is just commom sense and grade 3 arithmetic. How can anyone be surprised by that?

November 27, 2022
5:36 pm
Bill
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If you want to change people's behaviour (e.g. re house prices) then some "pain" is required for a period of time, otherwise back to party time right away. So I figure that's part of the plan, BoC people are just stupider than people here is not a plausible argument (to me). Also supply chain issues are persistent and not resolving as straight-line as had been expected after virus, plus no solution in sight for labour shortages in virtually every area of economy, thus higher inflation winds will persist.

November 27, 2022
6:26 pm
Dean
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canadian.100 said

I think most of us knew that the Bank of Canada appears to have less than stellar management - we know that the BoC delayed far too long in raising rates to cool inflation and we will pay the price for a while. . . .  

So please tell us, Oh 'Wise One' . . .

    Given that this recent period of inflation is Not just a Canadian problem ...
    it's Global, which "Bank of ???" got it right ❓

.
We will Respectfully & Patiently await your answer.

'Namaste' sf-embarassed

    Dean

sf-cool " Live Long And Prosper " sf-cool

November 27, 2022
7:26 pm
canadian.100
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Dean said

So please tell us, Oh 'Wise One' . . .

    Given that this recent period of inflation is Not just a Canadian problem ...
    it's Global, which "Bank of ???" got it right ❓

.
We will Respectfully & Patiently await your answer.

'Namaste' sf-embarassed

    Dean

  

Japan had an annual rate of inflation of around 3.7% for October 2022.
France and Italy also had lower inflation rates than Canada's 6.8%.
Yes inflation is a world problem but some countries are doing better than Canada.

November 28, 2022
5:35 am
savemoresaveoften
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Whether BoC runs profit or loss is irrelevant. That money gets remitted to / from the Treasury every year any way. If the BoC ‘s pay is tied to performance and is evaluated like a hedge fund with a high water mark, maybe they will do a better job

November 28, 2022
6:12 am
Bill
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More than central banks that impact inflation. For example, Japan sits atop global economic complexity index, both France and Italy comfortably ahead of Canada, i.e. we make virtually nothing here, heavy importers more affected by global inflation. Just an example, there are many other factors. And Canada is doing quite well, inflation-wise, compared to some other countries that are similarly under-developed.

November 28, 2022
10:07 am
Dean
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Dean said

So please tell us, Oh 'Wise One' . . .

    Given that this recent period of inflation is Not just a Canadian problem ...
    it's Global, which "Bank of ???" got it right ❓

.
We will Respectfully & Patiently await your answer.

'Namaste' sf-embarassed

    Dean

  

canadian.100 said

Japan had an annual rate of inflation of around 3.7% for October 2022.
France and Italy also had lower inflation rates than Canada's 6.8%.
Yes inflation is a world problem but some countries are doing better than Canada.  

You're Cheery-Picking , Oh 'Wise One' . . .

As one of Many examples, much of the G20 have done a Whole Lot Worse than Canada { https://www.ctvnews.ca/business/how-canada-s-inflation-compares-with-other-g20-nations-1.6157203 } ... and that's just the G20 ❗

    Dean

sf-cool " Live Long And Prosper " sf-cool

November 28, 2022
11:09 am
canadian.100
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Dean said

canadian.100 said

Japan had an annual rate of inflation of around 3.7% for October 2022.
France and Italy also had lower inflation rates than Canada's 6.8%.
Yes inflation is a world problem but some countries are doing better than Canada.  

You're Cheery-Picking , Oh 'Wise One' . . .

As one of Many examples, much of the G20 have done a Whole Lot Worse than Canada { https://www.ctvnews.ca/business/how-canada-s-inflation-compares-with-other-g20-nations-1.6157203 } ... and that's just the G20 ❗

    Dean

  

My original point was that the BoC was late in starting to raise interest rates - there is (whether you agree or not) much agreement on that. You can express your opinion without going into such a rant.

November 28, 2022
12:30 pm
savemoresaveoften
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canadian.100 said

You're Cheery-Picking , Oh 'Wise One' . . .

As one of Many examples, much of the G20 have done a Whole Lot Worse than Canada { https://www.ctvnews.ca/business/how-canada-s-inflation-compares-with-other-g20-nations-1.6157203 } ... and that's just the G20 ❗

    Dean

  

My original point was that the BoC was late in starting to raise interest rates - there is (whether you agree or not) much agreement on that. You can express your opinion without going into such a rant.  

In BoC's defence, they are not the only one thats "late". Pretty much every single CB failed the exam.

November 29, 2022
9:37 am
Dean
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savemoresaveoften said

In BoC's defence, they are not the only one thats "late". Pretty much every single CB failed the exam.
 

    That ⬆

The study & practice of Economics (Macro & Micro) is far from being an exact science. The CBs of the world can only make 'Educated Guesses' of what's going to happen next. To expect them to be on-the-mark all the time, is quite Naive.

It's very similar to the game of horseshoes, or the throwing of hand grenades. You just cross your fingers that you're 'Close Enough'. sf-wink

    Dean

P.S.
Someone here needs to
Grow Some Bark. LOL

sf-cool " Live Long And Prosper " sf-cool

November 29, 2022
9:50 am
lifeonanisland
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Dean said

savemoresaveoften said

In BoC's defence, they are not the only one thats "late". Pretty much every single CB failed the exam.
 

    That ⬆

The study & practice of Economics (Macro & Micro) is far from being an exact science. The CBs of the world can only make 'Educated Guesses' of what's going to happen next. To expect them to be on-the-mark all the time, is quite Naive.

It's very similar to the game of horseshoes, or the throwing of hand grenades. You just cross your fingers that your 'Close Enough'. sf-wink

    Dean

P.S.
Someone here needs to
Grow Some Bark. LOL  

Someone here needs to be not quite as condescending.

November 29, 2022
10:52 am
LeBronBMT
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Others bank in the world mishandling interest rates is not a justification. They all messed up. Simple as that.

November 29, 2022
12:37 pm
canadian.100
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LeBronBMT said
Other banks in the world mishandling interest rates is not a justification. They all messed up. Simple as that.  

I agree 100% .......and we also will pay the price.

November 29, 2022
12:54 pm
Loonie
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When the problem is this pervasive ( i.e. global and systemic), I don't think it makes sense to just blame the local functionaries. I'm not especially fond of Tiff but I doubt anyone else would have done much better. They all work from the same assumptions and principles, it seems to me. We could be worse off under different management.

November 29, 2022
1:15 pm
Bill
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Tuesday afternoon, my town's roads are full of cars pulling in and out of retail places, people seem to spending as usual, not sure I see much evidence of messing up, paying the price, etc.

November 29, 2022
1:25 pm
Loonie
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You're not looking in the right places.

November 29, 2022
2:28 pm
canadian.100
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Bill said
Tuesday afternoon, my town's roads are full of cars pulling in and out of retail places, people seem to spending as usual, not sure I see much evidence of messing up, paying the price, etc.  

It is true that we are told that GDP numbers are increasing, and unemployment is at a low 5% - and there are lots of jobs available if people do want to work - so perhaps you are not mistaken - maybe things aren't really that bad.

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