The European Central Bank (ECB) unveiled a newly reformulated, more ambitious inflation target. Without new mechanisms to achieve it, however, we believe inflation will remain stubbornly stuck well below 2%.

Buoyed by faster growth and higher inflation expectations, the Fed advances rate hikes to 2023 and broaches the topic of tapering.

We believe the U.S. is undergoing a large price-level adjustment, not shifting to a persistently higher inflation regime.

To sustainably reach its inflation target, the Fed must raise inflation expectations – and that likely will require a period of above-target inflation.

Amid a brightening economic outlook, the Bank of Canada could begin tapering its bond purchase program this month, though we think it’s a close call and believe a cautious approach is warranted.

The expiration of the temporary SLR changes should enhance the soundness of the banking system, but likely at the cost of Treasury market liquidity.

The Federal Reserve’s communications following its March meeting should help anchor inflation expectations.

The Federal Reserve signals that monetary policy accommodation will remain firmly in place.

Policy will continue to be carefully calibrated as China walks a tightrope between supporting growth and maintaining financial stability.

We believe the Fed’s mortgage purchase program is helping to bolster economic activity, and accomplishing more than Treasury purchases alone.

The lack of market reaction suggests that many investors are not convinced that the Fed’s new guidance represents any material shift in policy.

Fed officials seek higher inflation but need help from fiscal policymakers.

The Federal Reserve wants financial conditions to remain accommodative as it looks to support the U.S. recovery.

European measures applied to mitigate the effects of the pandemic have contained the unemployment rate in Europe more than in the U.S. While recognizing economic risks from the rising number of COVID-19 cases in the U.S., our forecast sees this success ratio reversing before the end of the year.

We expect more stimulus, both monetary and fiscal, will be necessary to support the recovery amid the renewed COVID-19 outbreak.

We expect the Federal Reserve will continue to conduct asset purchases at its current pace through year-end, and eventually commit to keeping interest rates on hold through 2022. This should help ensure easy financial conditions and support the economic recovery.

Over the next several quarters, monetary conditions will likely be set not only by Fed balance sheet policies, but also by the expected path of interest rates.

Canada’s economy may be at greater risk for lasting damage, but we believe Ottawa is well-positioned to respond.