Since the start of the pandemic, the Bank of Canada has been buying up billions of dollars worth of bonds each week, which has helped keep borrowing costs, including fixed mortgage rates, low.

On Thursday, BoC Governor Tiff Macklem outlined the roadmap for ending the Bank’s bond-buying program, also known as Quantitative Easing, or QE.

“As the recovery progresses, we are moving closer to a time when continuing to add stimulus through QE will no longer be necessary,” Macklem said in a prepared speech to the Fédération des chambres de commerce du Québec. “(But) we are not there yet—and that timing is a monetary policy decision that will depend on economic developments.”

At the height of the program, the Bank was purchasing up to $5 billion worth of bonds per week, but that amount has gradually been reduced to $2 billion. In total, the Bank has acquired more than $316 billion of Government of Canada debt since last March.

Macklem noted the Bank is approaching the “reinvestment phase” of its QE program, which he said will begin after the next reduction in the pace of bond purchases. The goal, he said, will be to eventually match the level of ongoing purchases to the pace at which bonds are maturing, “to keep our holdings of bonds relatively stable.”

That pace is estimated at between $4 billion and $5 billion of bond purchases per month.

While Macklem said the timing of future monetary policy moves will be guided by the Bank’s assessment of the economic outlook and the “strength and durability” of the recovery, some analysts suspect the next reduction in bond purchases could come at the next rate decision meeting in October.

“Assuming the recovery is able to regain its footing over the coming seven weeks, we think the Bank will be looking to step down its pace of QE at the late-October meeting,” wrote economists from National Bank of Canada. “As always though, data dependency is the name of the game.”

Prior to that meeting, the Bank will have another jobs report—in addition to the report released today showing the addition of 68,500 full-time jobs in August—and another month of GDP data to help with its assessment.

Looking further out, the Bank will eventually withdraw its bond purchases altogether, Macklem said, which will see its holdings of Government of Canada bonds decline. But that won’t come until after the Bank starts to raise interest rates.

“…it is reasonable to expect that when we do eventually need to reduce monetary stimulus, our first move will be to raise the target for the overnight rate—our policy interest rate,” he said. And that’s widely expected to begin in the second half of 2022.