Group that advises the Bank of Canada on debt markets is livid over Freeland's decision to scrap inflation-adjusted bonds

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Fixed\u002Dincome investors overseen by Bank of Canada are livid over Finance Minister Chrystia Freeland\u0027s decision to cancel the bonds. Read on

, which are a useful hedge against inflation for pension funds and other institutional investors because the yield is linked to changes in the consumer price index.By clicking on the sign up button you consent to receive the above newsletter from Postmedia Network Inc. You may unsubscribe any time by clicking on the unsubscribe link at the bottom of our emails or any newsletter. Postmedia Network Inc. | 365 Bloor Street East, Toronto, Ontario, M4W 3L4 | 416-383-2300A welcome email is on its way.

“The government has decided to cease issuance of real return bonds effective immediately,” the Finance Department said in an update to its. “This decision reflects low demand for this product and will allow the government to promote liquidity by consolidating funding within our core funding sectors.”

“Members disagreed that liquidity for RRBs was an issue material enough to cancel the program,” the minutes said. “Most noted that while it is somewhat worse than liquidity for nominal bonds, they are still able to transact in quantities they need. Some members felt that RRB liquidity is generally better relative to inflation index-linked bonds in several other jurisdictions, for example the U.K.

 

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