MNI POLICY: BOC Balance Sheet Record CAD509B on Federal Bonds

By Greg Quinn

     OTTAWA (MNI) - The Bank of Canada's balance sheet topped the half trillion

dollar mark for the first time as federal bond purchases continued to rise

faster than the minimum target of CAD5 billion a week.

     Assets grew to CAD509 billion as of June 17 from CAD498 billion a week

earlier, figures the Ottawa-based bank posted Friday showed. Federal bonds

climbed CAD7 billion to CAD152 billion, and t-bills by CAD2.6 billion to CAD118

billion. 

     Holdings of repos stalled at CAD211 billion, and the third week of a

program to buy up to CAD10 billion of corporate bonds amounted to just CAD94

million. Provincial bond and bill holdings were CAD11.7 billion. 

     BOC Governor Tiff Macklem told lawmakers Tuesday he's not concerned about

the size of the balance sheet and it can grow as needed to stabilize markets and

help the economy out of a deep hole. The Fed's balance sheet shrank for the

first time since February this week, though Fed Chair Jerome Powell said he can

expand QE and it will be a while before major reductions are possible.  

     Canada's bond purchases ease the strain of financing a federal deficit that

Parliament's budget officer said will reach a record CAD256 billion or 11.8% of

GDP. That figure doesn't include the latest major spending plan, a two-month

extension of household relief checks that may cost tens of billions of dollars.

     The balance sheet now equals 22% of first-quarter GDP annualized. 

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

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