MNI BRIEF:BOC's Record Federal Bond Holdings Top CAD400Bn

The Bank of Canada's holdings of federal government bonds passed the CAD400 billion mark to set a fresh record, ending the week higher despite Governor Tiff Macklem announcing the paring back of weekly QE purchases for a third time.

The central bank's assets included CAD403.4 billion of federal bonds according to the latest weekly figures, up from CAD399.5 billion.

The BOC on Wednesday scaled back its QE program focused on federal debt purchases to CAD2 billion a week from CAD3 billion. Policy makers said further scaling back depends on whether the strong economic rebound continues as expected, and signaled there will be a phase where asset purchases are focused on stabilizing the size of the balance sheet. QE may mostly unwind around the end of the year, MNI has reported.

It's unclear what pace of QE would stabilize the balance sheet or level of assets the BOC wants to hold. The BOC's balance sheet stands at CAD487 billion this week, down from a March peak of CD575 billion. It was CAD125 billion before the pandemic.