The DSBC provides OSFI, industry participants, and key economic policy voices with an independent assessment of the appropriate size of the buffer in pursuit of OSFI’s mandate of contributing to public confidence in the Canadian financial system. [...] Members highlighted that while OSFI did not increase the DSB to the top end of its 0-4 percent range at its last meeting, the buffer remains near the high end of the range. [...] Members noted that OSFI’s decision on the level of the DSB must consider risks that arise on the domestic front as well as internationally. [...] Members also mentioned that as the Bank of Canada starts to loosen monetary policy, the terminal or neutral rate, reflecting an economy operating at potential and stable inflation at the 2 percent target, will likely be higher than originally anticipated, and the speed of the reduction in rates is likely to be slower than many people had expected. [...] With the DSB near the top end of the range, and the economy potentially entering a slowdown, members argued that there was insufficient justification to increase the DSB.
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