If the Bank of Canada wants to alleviate undesired downward pressure on the overnight financing rate it will enter into a ________.

Question

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A repurchase agreement (repo) is a secured loan in which a bank or other financial institution lends money to a broker-dealer, using the broker-dealer's Treasury securities as collateral. The broker-dealer agrees to buy back the securities at a specified price on a specified date. Repos are typically used to finance short-term trades in Treasury securities. In this case, the Bank of Canada is acting as the lender, and the broker-dealer is acting as the borrower. The Bank of Canada is lending money to the broker-dealer in order to alleviate undesired downward pressure on the overnight financing rate.

If the Bank of Canada Wants to Alleviate Undesired Downward