MNI POLICY: BOC Balance Sheet Hits Fresh Record, Growth Slows

By Greg Quinn

     OTTAWA (MNI) - The Bank of Canada's balance sheet grew to a fresh record on

Friday, while growth in asset purchases slowed even with Governor Stephen Poloz

working on programs to buy provincial and corporate bonds.

     Assets climbed CAD28.2 billion to CAD349 billion as of April 22, less than

the previous week's CAD45.1 billion increase. 

     Policy makers on April 15 said they could increase plans to buy at least

CAD5 billion a week in federal debt, and holdings of federal bonds and t-bills

both increased by around CAD8 billion this week. The BOC has made asset

purchases the focus of any new stimulus by affirming the current 0.25% overnight

borrowing rate is the effective lower bound and pledging to do whatever is

needed to stabilize markets. 

     The overall increase reported Friday was again led by repos, to CAD167

billion from CAD143 billion a week ago. At the start of last month those

holdings were just CAD15.5 billion. 

     Holdings of short-term credit known as Bankers' Acceptances declined for a

second week, this time to CAD28.3 billion from CAD37.6 billion. 

     --PROVIES

     The BOC has committed to buy up to CAD50 billion of provincial government

bonds and up to CAD10 billion of corporate bonds starting around early May. The

BOC also said it would buy 40% of federal T-bills and lengthen term repos out to

24 months.

     Beyond that, economists say the CAD5 billion a week promise on federal debt

could easily reach CAD200 billion over time. 

--MNI Ottawa Bureau; +1 613-314-9647; email: greg.quinn@marketnews.com

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