The Bank of Canada uses _____ to target the overnight rate.

Question

Quizplus · Accepted Answer

The Bank of Canada uses open market operations to target the overnight rate. Open market operations involve buying and selling government securities to influence the supply of money in the economy and hence the overnight rate. Changes in the bank rate and deposit insurance maximums can also affect interest rates, but they are not used by the Bank of Canada to directly target the overnight rate. Government spending can have an indirect effect on interest rates through its impact on the economy, but it is not a direct tool used by the Bank of Canada.

The Bank of Canada Uses _____ to Target the Overnight