Examining the Future Monetary Policy in Canada and the United States

In the final assessment you will examine and discuss issues related to current and future monetary policy in Canada and the United States. There are three parts to the assignment.  The page length for each part is specified in the instructions.  The final report should include a title page, a table of contents, a reference section and a data appendix table. The report should be double spaced, use 12 point font and have 1 inch margins. Any figures or tables included should appear at the end of the report.  They should be properly labelled with the source of the data clearly identified.  Additional information on the data series displayed in the figures should be placed in the Data Appendix table. For each series used, there should be an entry in the data appendix table that gives the source of each data series, the name of the data series (and the data series identifier if applicable), a link to the webpage you downloaded the data from and information on the first and last data observation for the series you used in the figure or table.
Part A: Examining Policy Scenarios [34 points]
In this part of the assignment you will be taking the role of an advisor on Canadian monetary policy. The Bank of Canada’s April 2021 Monetary Policy Report (published on their website), identified a number of risks to the inflation outlook.  Summarize the risks identified and for each case, using what we have learned over the term, describe what policy actions you think the Bank of Canada should take if that risk is materialized.  There should be one analysis for each risk. Of the risks identified, which, if any, do you believe have materialized since the release of the April 2021 Monetary Policy Report. Justify your responses with data, new market projects, and/or articles.  Any data sources, articles or market projections used should be properly document in a reference section.  If you use figures and/or tables, please number them accordingly and attach them at the end of the brief.
Approximate total page length of Part A: 4-5 pages
 
Part B: Expectations and responses to the June 9th 2021 Bank of Canada Interest rate announcement [23 points]
In this section you will summarize the Bank’s interest rate announcement that will take place on JUNE 9, 2021 at 10AM EST and comment on whether it appears that the Bank of Canada’s decisions about the policy rate was anticipated by markets.  As part of your discussion, you should find and discuss the content of two newspaper articles/pieces of media coverage aired/published from June 1-June 8, 2021 (before the announcement). You may also use other data series or articles as necessary to support your position and analysis. The articles/media coverage you refer to should be properly cited on a reference page with links to the material referenced in a footnote. If the media is a video link, you need to include information on the time range where the discussion on the Bank of Canada’s expected actions are discussed.
Approximate total page length Part B: 2 pages
 
Part C: Exploring the effects of American data releases and Monetary Policy [43 points]
In this section, you will explore the impact of a data release on markets and discuss the current stance of the Federal Reserve’s Monetary Policy. You will need to answer the following questions and create table or figures (either by downloading data from primary sources and creating the figures yourself or using online dashboards where you can select data series and take snapshots of graphs produced on the site).
What major data was released by the Bureau of Labor Statistics on the morning of May 12, 2021? Locate the data series for the main aggregated versions of these variables and provide a table with the values for these series for the last year. Detailed, category level data should not be included.  Were these data above or below expected levels? How have the level of these variable changed over the past few months? Discuss
Provide Figures that show the levels for the Canadian US exchange rate, and the S&P 500 from February 1, 2021 – current.  Discuss what effect, if any, the data released on May 12 has had on these markets? Are the movements consistent with the theories discussed in class? Justify your answer.
Located data on the Canadian and American Yield Curves and provide figures or tables showing examples of the curves for May 12 and at least two days before and after and the Yield curves at the beginning of Feb 2021. Do the Yield Curves appear to change in response to the data? Are the movements consistent with the theories discussed in class? Justify your answer.
Summarize the Federal Reserves’ Monetary policy as of the end of April 2021. Did the Federal Reserve signal any change in its current policy stance in response to the data released on May 12, 2021?  Why or why not? Do you think the response would be the same if the Fed was still using its Dual Mandate Framework with a 2% inflation target instead of the current average inflation target? Why or why not?
Approximate total page length of Part C: 3-5 pages excluding tables and figures