If the Bank of Canada charges for negative settlement balances to LVTS participants an interest rate of 3.5 percent then the operating target of the Bank's monetary policy is ________.
A) 3.25 percent
B) 3.75 percent
C) 3 percent
D) 4 percent

Question

Quizplus · Accepted Answer

The operating target of the Bank of Canada's monetary policy is typically the midpoint between the interest rate charged on negative settlement balances (3.5%) and the interest rate paid on positive balances. Assuming the latter is 3.0%, the target would be 3.25%.

If the Bank of Canada Charges for Negative Settlement Balances