The Central Bank of Canada acknowledged on Thursday that “some of the monetary policy instruments it uses to combat the coronavirus pandemic, including quantitative easing, could widen wealth inequality,” Zero Hedge reported.
The financial institution added that they were “considering the issue” carefully. It is not yet clear what exactly this should mean.
“The quantitative easing program increases the wealth of richer people as it inflates the value of assets,” Governor Tyff McLem acknowledged. “These assets are not evenly distributed in society. Thus, quantitative easing can increase wealth inequality. We will work to better understand their effects on income and wealth inequality.”
The Bank of Canada bought $ 4 billion a week in government bonds, only recently reducing them to $ 3 billion. It is the first major central bank to shrink its monetary policy, signaling that it could also raise interest rates next year.
However, despite such a forecast, MacLeam pointed out that the bank’s key interest rate will remain at 0.25% until “inflation” reaches 2%.
And for us, looking for some semblance of common sense, beggars cannot be chosen. In the same vein, MacLem reiterated that the bank’s reference interest rate will remain at 0.25% until inflation steadily reaches 2%.
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