While the Federal Reserve will seek to guide the renormalization process so that markets readjust smoothly as monetary policy is brought back to normal, there is an important risk that there will be some bumps along the way. What will the exit mean for Canada?
In recent weeks both nominal and real long-term rates have increased. The five-year forward five years ahead real rate is now close to its December 2019 level. 13. Lagarde, C. (2021), “Investing in our climate, social and economic resilience: What are the main policy priorities?”, speech at the opening plenary session of the European Parliamentary Week 2021, 22 February. 14.