Op-Eds

Earlier this month, the Bank of Canada left its target for the overnight interest rate at 25 basis points while maintaining the pace of its quantitative easing (QE) program by continuing to purchase Government of Canada debt at a rate of $2 billion per week. Markets widely expected that: any major change to tighten or ease monetary policy in the middle of an election campaign might have been interpreted as a political statement. But with the economy stalling, inflation spiking (headline inflation was 4.1 per cent in August) and federal government stimulus not ending soon, what is next for monetary policy?

We are at an interesting point on the path of pandemic inflation. One perspective thinks it’s on track. As of July,…

All the major political parties have put out their plans to deal with the housing market crises in Canada’s cities. The focus is on affordability. In other words, how to make home ownership easier for Canadians currently priced out of the housing market. But is there much the federal government can do? Unfortunately, the answer is no, with most levers – especially those that will encourage more supply – at lower levels of government.

First, let’s understand the constraint on affordability. The amount Canadians pay for their mortgages out of their disposable income is roughly the same as 30 years ago. However, with house prices skyrocketing, fuelled by low interest rates, the constraint to home ownership is getting the necessary…

A basic principle of good governance in Canada is that governments set mandates for crown corporations and regulatory authorities and those arm’s-length institutions then make use of the tools at their disposal to design actual policies. This principle is under threat on the campaign trail as politicians weigh in on one of the issues voters care most about these days, housing affordability.

All parties have put out ideas and plans for taming Canada’s housing markets. They all acknowledge the need to increase supply — which at the end of the day is the only real long-term fix — while trying to free up extra cash for people to make a down payment on a home in their desired neighbourhood. But in the blizzard of proposals there are…

Canada’s buoyant housing market, with lots of new construction, booming renovations, and a torrid pace of transactions, has been a good news story in a year that had too few. But as underlined in a recent FP article called “The housing boom that never ends,” the news on housing has been a little too good.

Meanwhile, other business investment – in non-residential structures, machinery and equipment, and intellectual property – has languished. We ended 2020 in a troubling place: recent GDP numbers from Statistics Canada showed that private residential investment almost equaled all other types of private investment in the fourth quarter. In other words, almost half of all private non-consumption spending was on housing…

The green bond market was growing rapidly until the pandemic hit in 2020 and its progress stalled under economic shutdowns. As the recovery unfolds, green bonds – fixed-income securities used to finance sustainable projects – appear poised to resume their trajectory, in Canada and abroad. But should the federal (and provincial) governments get into the action with their own green bond issues?

In a recent C.D. Howe Institute paper, I argue there are many good reasons for Ottawa to issue its own green bonds; chief among them is the setting of a benchmark price that can help build overall market capacity in Canada. The other key question is how the federal government can best play a role.

These bonds instruments, whose…