EC140 Lecture Notes - Open Market Operation, United States Treasury Security, Overnight Rate
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EC140 Full Course Notes
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Document Summary
On 8 pre-set dates a year, bank announces whether interest rate will rise, fall, or remain constant. Canada"s monetary policy objectives stem from relationship between the bank and the government. The bank of canada"s governing council is responsible for the conduct of monetary policy. The governor and the minister of finance must consult regularly. If the governor and the minister disagree in a profound way, the minister may direct the bank in writing to follow a specified course and the bank would be obliged to accept the directive. Objective of monetary policy is ultimately political. Based on the mandate of the bank of canada, which is set out in the bank of canada act 1935. Bank"s major task is to control the quantity of money and interest rates to avoid inflation. Bank should prevent excessive swings in real gdp growth and unemployment if possible. But the bank pays close attention to core inflation, which it calls its operational guide core.
