In addition to targeting the overnight interest rate at the mid-point of the operating band, the Bank of Canada also targets ________.
A) the prime rate
B) the level of settlement balances
C) the treasury bill rate
D) the money multiplier

Question

Quizplus · Accepted Answer

The Bank of Canada also targets the level of settlement balances or the amount of money held in accounts by financial institutions. This helps them influence the overnight interest rate and ensure it stays at their target of the mid-point of the operating band. The prime rate, treasury bill rate, and money multiplier are not direct targets of the Bank of Canada's monetary policy.

In Addition to Targeting the Overnight Interest Rate at the Mid-Point