If the Bank of Canada lowers the overnight loans rate, other short-term interest rates ________ and the exchange rate ________.

Question

Quizplus · Accepted Answer

When the Bank of Canada lowers the overnight loans rate, other short-term interest rates also fall as it becomes cheaper for banks to lend money. This usually leads to a decrease in demand for the Canadian dollar, causing the exchange rate to also fall.

If the Bank of Canada Lowers the Overnight Loans Rate