OTTAWA (Reuters) – The Bank of Canada slashed the frequency of its provincial bond buying program on Tuesday, saying provincial credit markets are functioning well and no longer need as much support.
The central bank will now hold one reverse auction per week instead of two. Bloomberg News initially reported the change.
Bank of Canada spokesman Alex Paterson said in an email that the move was “in line with the step-down approach” for other programs that have been introduced by the bank to stabilize markets.
The Provincial Bond Purchase Program (PBPP) was launched last year to purchase up to C $ 50 billion ($ 39.7 billion) of eligible provincial bonds to boost market liquidity in the amid the COVID-19 pandemic. So far, the Bank has absorbed only C $ 17.4 billion.
The Bank of Canada has also bought Government of Canada securities or engaged in quantitative easing in an effort to support the economy during the pandemic. In January, the central bank said it would reduce the pace of purchases from the current level of C $ 4 billion per week as it gained confidence in the strength of the recovery.
Bank of Canada Governor Tiff Macklem said on Tuesday that the central bank remains committed to its quantitative easing program until the economic recovery is well underway.
($ 1 = 1.2592 Canadian dollars)
Reporting by Julie Gordon in Ottawa, additional reporting by Fergal Smith; edited by Richard Pullin