The Bank of Canada recently announced that it is clawing back its purchase of GOC bonds. We all know that from the onset of the pandemic the BOC made significant effort to hedge against risk and inject liquidity into the financial markets through its bond buy-back's. On the surface it would appear that easing of the previous policy would signal good news. What I am watching however is the impact that monetary policy has on inflation. Inflation has spiked and if not curtailed I cannot see how the cost of borrowing will not be impacted. Many say that inflation is temporary rather than structural due to supply chain disruptions. Perhaps that is true however it is unclear to me how willing companies will be to reduce prices when we keep hearing about "the new normal". The phrase "new normal" has implications on cost if a supplier uses this to justify higher operation costs to keep workers and customers safe. #recg #economy #financeandeconomy #supplychain #canada #structural #riskmanagement #commercialvaluations #realestate #costofliving
- Demitry Omrin