Is the BoC About to Catch a Falling Knife?

Central bankers are taking heat for being reactive rather than proactive in their approach to policymaking. The Bank of Canada (BoC) is no exception. The institution has been behind the curve in adjusting to changing macroeconomic conditions from the get-go. In early 2020, Governing Council took two weeks longer than its peers to respond forcefully to the worst deterioration in economic activity since the Great Depression. Later, even though financial markets were stabilizing and the economy was well on its way to recovery, the BoC’s quantitative easing program continued to gobble up sovereign bonds in an otiose attempt to add stimulus.