From 2009 to 2014, with the Fed creating dollars to buy mostly US Treasuries and some AAA-rated mortgage debt, USD strengthened versus CAD. Expectations might have been that that between 20, as the Fed expanded its balance sheet while the BOC did not, the US dollar should have weakened versus CAD. The relationship between CADUSD and QE is a curious and counterintuitive one. That said, relative to the size of its economy, the Bank of Canada did a bigger QE than any other central bank since the end of March (+22.1% of GDP). ![]() It recently joined the QE club - and with gusto.ĭespite Bank of Canada's first-ever foray into QE, it has a much smaller balance sheet than its peers relative to the size of its economy (27.3% of Canadian GDP versus 33.5% of US GDP for the Fed, 35.5% of UK GDP for the Bank of England, 54.7% of eurozone GDP for the European Central Bank, and 125.1% of Japan's GDP for the Bank of Japan). One difference between the US and Canada is that while the Federal Reserve engaged in three rounds of quantitative easing (QE) between 20, the Bank of Canada (BOC) refrained from asset purchases until after the pandemic struck. ![]() Canada and the US both have experienced decades of low, stable inflation.
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