Bank of Canada Deputy Governor Toni Gravelle said the central bank is trying to reduce strains in short-term funding markets by regularly increasing the size of its two-week repo operations. Gravelle outlined how policymakers are addressing the upward drift of Corra — the Canadian Overnight Repo Rate Average — at the Bloomberg Canadian Finance Conference in New York on Tuesday.

Corra 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. Lately, Corra has been running 4 to 5 basis points above the central bank’s target for the overnight rate, which is currently 2.25%. Corra settled at 2.3% on Monday.

“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. The remarks follow a prolonged period of liquidity strains in Canada’s overnight repo markets, which had regularly pushed Corra above the central bank’s target.

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. Gravelle confirmed that the central bank will start using the Canadian Collateral Management Service in the first quarter of 2027. He said it’s possible the central bank will push back the date when it begins purchasing Canadian government bonds again, potentially to 2028.