OTTAWA, Nov 30 ― The Bank of Canada yesterday reported its first ever loss, as its drive to counter inflation with interest rate hikes caused a mismatch between its assets and liabilities.
In a third quarter financial report, the central bank said it was C$522 million (RM1.7 billion) in the hole, after paying out higher interest on commercial bank deposits than it earned on bonds it holds.
Bank governor Tiff Macklem last week told lawmakers that the losses won't affect the bank's ability to conduct monetary policy, which he noted is not intended “to maximise our income.”
But it could spark a political backlash with the opposition Conservatives decrying the need for a bailout.
It will now be up to the finance department to backstop those losses directly or allow the bank to defer them until it returns to profitability.
“The size and duration of the losses will ultimately depend on a number of factors, including the path of interest rates and the evolution of both the economy and the balance sheet,” Macklem told the parliamentary finance committee.
The central bank's past earnings over its 87-year history were remitted to the government as it is not allowed to retain them.
Central banks in Australia and Britain have also posted losses in recent months. ― AFP
