Some elements of pandemic aid will be ended, while others will be scaled back
With the larger market seeing signs of improvement, the Bank of Canada has announced that it is scaling down some of its emergency liquidity measures.
Among these are the BoC’s bankers acceptance facility, which is slated to be discontinued by Oct. 26, and the extended term repo operations, which will see a markedly reduced frequency.
Effective Wednesday, “the bank will reduce the frequency of its term repo operations from weekly to bi-weekly,” the BoC said in its statement. “As such, the subsequent term repo operation will be conducted on November 3, 2020. The exact date and terms will be announced prior to each operation.”
The Canada Mortgage Bond Purchase Program is similarly scheduled for the chopping block. As reported by Bloomberg, the three programs saw their holdings decline from a peak of around $220 billion in June to just $170 billion.
The institution said that more adjustments down the line are possible.
“The bank will continue to monitor market conditions and, if warranted, may further revise its programs, including making changes to the size and maturity tranches of the term repo operations,” the BoC said.
Observers said that the just-announced changes were justified by the current environment.
“Market functioning and liquidity are back to pre-pandemic operational levels,” said Ian Pollick, head of fixed income, currency and commodity research at Canadian Imperial Bank of Commerce. “So quantitative easing and unconventional policy must adapt to that reality.”
