If the Bank of Canada wants to relieve undesired upward pressure on the overnight interest rate it will enter into a ________.

Question

Quizplus · Accepted Answer

The Bank of Canada will enter into a Repo (Repurchase Agreement) to relieve undesired upward pressure on the overnight interest rate. This is because the Bank of Canada will sell securities to banks with the agreement to repurchase them at a later date, which increases the overall cash available for banks and therefore reduces the overnight interest rate.

If the Bank of Canada Wants to Relieve Undesired Upward