The Bank of Canada's 2024 annual report reveals ongoing economic uncertainty for the third consecutive year, despite reduced interest rates. It faced significant losses of $3.079 billion in 2024, preceded by $5.749 billion in 2023 and $705 million in 2022, marking its first losses in 88 years.

According to the most recent annual report, the extensive losses transpired because the interest incurred on deposits exceeded the interest earned on investments.

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Following a 4.75% increase in the benchmark interest rate from Q1 2022 (0.25%) to Q3 2023 (5.00%), the Bank of Canada (BoC) gradually lowered it to 3.25% by Q4 2024, leading to increased interest expenses on deposits.

The central bank's increased government bond purchases during the pandemic, funded by creating settlement balances, led to asset expansion that costs more than it earns.

In January 2023, C.D. Howe Institute estimated the total losses over the next two to three years would add up to between $3.6 and $8.8 billion.

Conservative Party leader Pierre Poilievre previously accused the BoC of "printing money" via quantitative easing to stimulate the economy, stating in 2022 that Ottawa elites were "upset" he was holding them accountable for the "harm caused to everyday people."

At the time, Poilievre specifically blamed Governor Tiff Macklem for the higher prices, fuelled by pandemic-related spending. 

Bank spokesperson Paul Badertscher informed the Globe and Mail that it anticipates total losses of $5 to $6 billion in the coming years, projecting a return to positive net interest income by 2025. The BoC aims to mitigate ongoing risks responsibly in its current strategic plan.

BoC staff costs increased by $63 million (19%) in 2024 compared to 2023, according to the annual report; a rise driven by salaries, increased benefits and more.

The BoC anticipates staff costs remaining its largest expense in 2025. Other expenditures cover costs for core functions, system and tool enhancements, risk management, resilience, and future preparedness.

"The Bank's mandate under the Bank of Canada Act is to promote the economic and financial welfare of Canada," reads the 2023 third-quarter report. "Its activities and operations are … not with the objective of generating revenue or profit."

Macklem clarified that the central bank's recent losses would not impede its monetary policy capabilities, as the bank has historically been profitable. Since 1935, the Bank has incurred profits of roughly $160 billion in 2021 dollars.