Macroeconomics Chapter 9?

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Macroeconomics Chapter 9?


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Describe the Bank of Canada.
Canada's central bank and responsible for monetary policyEstablished by the Bank of Canada Act (1935) with a mandate for economic growth, exchangerate stability, low unemployment, and low inflation.- Since 1991, the Bank has set monetary policy to achieve an inflation target. Currently thetarget is 1-3 percent CPI inflation.-The Bank implements monetary policy by controlling and changing a (very) short term nominal interest rate, referred to as the policy rate.- Monetary policy is implemented (since 2000) with regularly scheduled announcements - eightper year.
 Interest Rate Determination
- The Bank of Canada sets the overnight interest rate - its policy rate, which then influences the shorter and longer term market interest rates.- By changing interest rates in the economy, the Bank attempts to manage aggregate expenditure and hence economic fluctuations.
Key Market Interest Rates
prime business rate for commercial lending (prime rate); mortgage interest rates.
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