Bank of Canada: QT to end in 2025 [Video]

The Bank of Canada expects quantitative tightening to end sometime in 2025, deputy governor Toni Gravelle said in a speech Thursday about how the central bank plans to manage its balance sheet.

The central bank launched quantitative easing operations for the first time ever during the pandemic — a process that involved buying government bonds from financial institutions using central bank money called settlement balances — to indirectly drive down interest rates.

The central bank is now allowing those bonds to mature without being replaced, which has decreased the value of settlement balances financial institutions hold to about $100 billion.

In a speech in Toronto, Gravelle said the central bank estimates that process, which is called quantitative tightening, will end when settlement balances decline to somewhere between $20 billion and $60 billion.

He said once quantitative tightening ends, the central bank will resume its normal market operations, meaning it will …