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Bank Of Canada To End Quantitative Tightening By 2025

According to Bank of Canada Deputy Governor Toni Gravelle, the central bank is likely to end its current round of quantitative tightening in the first half of 2025.

Gravelle made the comments during a speech at a conference in Montreal, and added that
the Bank of Canada’s current quantitative tightening program will conclude once settlement balances reach $20 billion to $60 billion.

Settlement balances in Canada are currently at $200 billion.

“Our balance sheet must continue to normalize to remove the support it provides to monetary policy,” said Gravelle in his speech.

The comments mark the first time that a Bank of Canada official has put a date on the end of the current quantitative tightening program, which began in April 2022 along with interest rate increases.

Gravelle added that it would be optimal for the Bank of Canada’s balance sheet to be at about 1% or 2% of Canada’s gross domestic product (GDP).

Canada’s central bank held its trendsetting overnight interest rate at 4.50% earlier in March as it evaluates the impact of rate hikes on the economy.

The Bank of Canada is scheduled to make its next interest rate decision on April 12.