Understand the markets this week: July 19, 2021

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    Given widespread confidence in the economic recovery, the bank will also ease its quantitative easing (QE) program. That is, they will relax or shorten their bond buying practice; it is adjusted to a target pace of $ 2 billion per week, up from $ 3 billion.

    A couple of weeks ago we looked at QE and the taper tantrum that the stock markets might throw.

    “With falling cases, rapid progress on vaccinations and eased containment measures, the Governing Council is increasingly confident that growth will rebound strongly as the economy reopens, and this time the growth will be more sustainable,” said Bank Governor Tiff Macklem in a press conference. “

    The bank also raised its own inflation expectations. Bank analysts now expect inflation to stay above 3% for the remainder of 2021. You see another slight spike in 2023 before inflation settles back down to the 2% target range in 2024. However, Macklem acknowledged that inflation will remain above target (2%). for several years.

    Recently, inflation in Canada has risen at an annual rate of 3.6% in May and 3.4% in April.

    The bank will keep an eye on employment. They are trying to encourage or facilitate a very inclusive labor market recovery, although they have stated that this may be their main ultimate goal.

    In this area, we have often spoken about how the pandemic affected the weak, both physically and economically. Macklem pointed to a report by Statistics Canada that showed the economy created 230,700 jobs in June. We need another 550,000 jobs to return to pre-pandemic employment.

    This could be possible as more restrictions are lifted across the country. In Ontario, almost everything opened on July 16, including the indoor restaurant.

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