The most important policy tool used by the Bank of Canada is
A) the target inflation rate.
B) the discount rate.
C) the required reserve rate.
D) the target for the overnight rate.

Question

Quizplus · Accepted Answer

The target for the overnight rate is the most important policy tool used by the Bank of Canada. This rate determines the interest rate at which banks borrow and lend money to each other on an overnight basis, and it has a ripple effect on the economy as a whole, influencing borrowing and lending rates for consumers and businesses. By setting a target for the overnight rate, the Bank of Canada can help to manage inflation and stabilize the economy.

The Most Important Policy Tool Used by the Bank of Canada