Most central banks, including the Bank of Canada, implement monetary policy by

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Most central banks implement monetary policy by influencing a short-term interest rate directly. This is often referred to as the policy rate, and it is the rate at which commercial banks can receive overnight loans from the central bank. By adjusting the policy rate, the central bank can influence borrowing and lending activity in the economy, which can affect aggregate demand, inflation, and employment levels. The Bank of Canada, for example, uses its key policy rate, known as the overnight rate, to influence the borrowing and lending activity in Canada's economy.

Most Central Banks, Including the Bank of Canada, Implement Monetary