Bank of Canada provides operational details for restarting asset purchases to end quantitative tightening

The Bank of Canada announced plans to complete balance sheet normalization and end quantitative tightening. Starting in early March, the Bank will begin purchasing assets as part of normal balance sheet management. The purchases are designed to replace maturing assets, offset the growth of banknotes in circulation, and stabilize settlement balances within a certain range over a year.

Asset purchases will first restart the term repo program, followed by purchases of Government of Canada (GoC) treasury bills, to restore a more balanced asset mix on the Bank's balance sheet.

Accordingly, the Bank will restart the term repo program on March 5, 2025, with operations conducted every two weeks. Depending on weekly conditions, the term of operations will alternate between 1-month operations and 1-month and 3-month operations. Initially, the size of term repo operations will be between $2 billion and $5 billion. The size will increase over time as the Bank's need for additional assets grows. Final operational details, including the size and specific maturity dates of term repos, will be announced one week before the operation date. For more information, see the updated terms and conditions.

Treasury bill purchases will resume later this year and will be conducted through government auctions. Purchase amounts will be announced through a regular tender process. The timing of the resumption of treasury bill purchases will ultimately depend on the evolution of the Bank's balance sheet, including the implementation of the term repo program.

Based on current projections of the Bank's future asset needs, purchases of Government of Canada bonds may not begin until as late as the end of 2026. When purchases begin, they will be conducted in the secondary market. Market notices containing operational details will be published in advance.