The difference between the Bank of Canada rate and the prime rate is based on the supply-and-demand relationships for short-term funds.

Question

Quizplus · Accepted Answer

The Bank of Canada rate is the overnight interest rate at which major financial institutions borrow and lend one-day (or "overnight") funds to each other. The prime rate is the interest rate that banks charge their most creditworthy customers for loans. The difference between the two rates is determined by the supply and demand for short-term funds in the market, as well as other factors such as inflation and economic conditions. Therefore, the statement is true.

The Difference Between the Bank of Canada Rate and the Prime