If the rate of inflation is expected to fall below the target range of 1 to 3 percent, the Bank of Canada will

Question

Quizplus · Accepted Answer

If the rate of inflation falls below the target range, the Bank of Canada will likely decrease the target for the overnight interest rate to encourage borrowing and spending, which stimulates economic activity and increases prices, ultimately bringing inflation back into the target range. This is because lower interest rates make borrowing cheaper and more attractive, leading to increased spending and investment, which in turn can help to push prices higher.

If the Rate of Inflation Is Expected to Fall Below