The operating band is
A)the target inflation rate plus or minus a quarter of a percentage point.
B)the interest rate that is established through an open market operation.
C)the target overnight interest rate plus or minus 25 basis points.
D)a half percentage point range in the target inflation rate.
E)the range between the lending rate and the borrowing rate.

Question

Quizplus · Accepted Answer

The operating band is the range around the target overnight interest rate that the central bank allows market interest rates to fluctuate in. It is typically plus or minus 25 basis points (or 0.25%). This allows for some flexibility in the market while still keeping the interest rate close to the desired target.

The Operating Band Is