ECON102 Chapter Notes - Chapter 30: Monetary Base, Overnight Rate, Taylor Rule
23 Apr 2016
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ECON102 Full Course Notes
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Monetary policy objective stems from the mandate of the bank: bank of canada act: Inflation rate targeting: a monetary policy strategy in which the central bank commits to an explicit inflation target explaining how its actions will achieve that target: interpretation of the agreement: Consumer price index is the measure of inflation. The bank believes that the core inflation rate provides a better measure of the underlying inflation trend and better predicts future cpi inflation. Bank must also consider the 8 volatile elements: actual inflation: Inflation-control target range will be 1% to 3% and that policy will aim at keeping the trend of inflation at the 2% target midpoint: rationale for an inflation-control target: The purpose of the bank is clearly understood by the financial market traders, leading to fewer surprises ad mistakes. The target provides an anchor for expectations about future inflation: controversy about the inflation-control target:
