Bank of Canada boosts two-week repo use to ease CORRA strain

Skip to Content News Archives Economy Energy Oil & Gas Renewables Electric Vehicles Mining Commodities Agriculture Real Estate Mortgages Mortgage Rates Finance Banking Insurance Fintech Cryptocurrency Work Wealth Smart Money Wealth Management Investor Personal Finance Family Finance Retirement Taxes High Net Worth FP Comment Executive Women Puzzmo Newsletters Financial Times Business Essentials More Innovation Information Technology FP500 Podcasts Small Business Lives Told Tails Told Shopping Financial Post Store Obituaries Place a Notice Advertising Advertising With Us Advertising Solutions Postmedia Ad Manager Sponsorship Requests Classifieds Place a Classifieds ad Working Profile Settings My Subscriptions My Offers Newsletters Customer Service FAQ News Economy Energy Mining Real Estate Finance Work Wealth Investor FP Comment Executive Women Puzzmo Newsletters Financial Times Business Essentials This advertisement has not loaded yet, but your article continues below.HomeEconomyBank of Canada boosts two-week repo use to ease CORRA strainCan 'tolerate only so much upward pressure'Author of the article:The Bank of Canada building in Ottawa. Photo by HYUNGCHEOL PARK/Postmedia filesBank of Canada deputy governor Toni Gravelle said the central bank is trying to reduce upward pressure on CORRA by regularly increasing the size of its two-week repo operations.THIS CONTENT IS RESERVED FOR SUBSCRIBERS ONLYSubscribe now to read the latest news in your city and across Canada.Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman, and others.Daily content from Financial Times, the world's leading global business publication.Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account.National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on.Daily puzzles, including the New York Times Crossword.SUBSCRIBE TO UNLOCK MORE ARTICLESSubscribe now to read the latest news in your city and across Canada.Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman and others.Daily content from Financial Times, the world's leading global business publication.Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account.National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on.Daily puzzles, including the New York Times Crossword.REGISTER / SIGN IN TO UNLOCK MORE ARTICLESCreate an account or sign in to continue with your reading experience.Access articles from across Canada with one account.Share your thoughts and join the conversation in the comments.Enjoy additional articles per month.Get email updates from your favourite authors.THIS ARTICLE IS FREE TO READ REGISTER TO UNLOCK.Create an account or sign in to continue with your reading experience.Access articles from across Canada with one accountShare your thoughts and join the conversation in the commentsEnjoy additional articles per monthGet email updates from your favourite authorsSign In or Create an AccountGravelle outlined how the central bank is addressing the upward drift of CORRA — the Canadian Overnight Repo Rate Average — at the Bloomberg Canadian Finance Conference in New York on Tuesday.This advertisement has not loaded yet, but your article continues below.The deputy governor said that while the central bank doesn’t want to react to every deviation in CORRA, it can “tolerate only so much upward pressure.”SUBSCRIBER EXCLUSIVE: FP West: Energy Insider brings you behind the oilpatch’s closed doors with exclusive insights from insiders every Wednesday morning.By signing up you consent to receive the above newsletter from Postmedia Network Inc.A welcome email is on its way. If you don't see it, please check your junk folder.The next issue of FP West: Energy Insider will soon be in your inbox.We encountered an issue signing you up. Please try againCORRA measures the cost of overnight money using Canadian government treasury bills and bonds as collateral for repurchase transactions. It’s supposed to closely track the central bank’s target for the overnight rate. When it doesn’t, it can be a signal that short-term funding markets aren’t functioning as smoothly as they should.“We now regularly increase the size of our two-week repo operations to get ahead of expected or seasonal pressures around quarter-end reporting dates for Canadian banks or large government bond maturities,” Gravelle said. “Supplying extra term cash in the repo market in this way helps reduce the likelihood of upward CORRA pressure.”The remarks follow multi-year liquidity strains in Canada’s overnight repo markets, which had regularly pushed CORRA above the central bank’s target for the benchmark interest rate.Those pressures intensified as the Bank of Canada shrunk its balance sheet during quantitative tightening, prompting policymakers to try reviving repo auctions, lowering the deposit rate, and other means of relief. Settlement balances are above the bank’s estimated steady-state range, and funding strains still emerge when liquidity demand spikes among major lenders and market participants. On Tuesday, CORRA was priced five basis points above the bank’s target for the overnight rate.This advertisement has not loaded yet, but your article continues below.The central bank added two-week term repo operations to its toolkit in October 2025.The Bank of Canada also issued a joint statement with the Office of the Superintendent of Financial Institutions aimed at alleviating concerns about the use of the Standing Liquidity Facility, or SLF, which gives participants of the Lynx payment system access to secured liquidity.The statement stressed that both institutions consider SLF use “to be consistent with routine liquidity management activities,” and not an exceptional measure.In his remarks, Gravelle said the statement was issued because some financial institutions worry that using the SLF could “send the wrong signal.” He said they should instead feel comfortable using it for unexpected shortfalls in end-of-day liquidity, rather than holding extra reserves for this scenario.He also confirmed that the central bank will start using the Canadian Collateral Management Service — a platform that automates parts of repo transactions to cut inefficiencies — in the first quarter of 2027. The central bank previously announced plans to join the platform, as well as its intention to eventually centrally clear its own repo operations using the Canadian Derivatives Clearing Corporation.This advertisement has not loaded yet.Notice for the Postmedia NetworkThis website uses cookies to personalize your content (including ads), and allows us to analyze our traffic. Read more about cookies here. By continuing to use our site, you agree to our Terms of Use and Privacy Policy.