Economics 1022A/B Chapter Notes - Chapter 30: Bank Reserves, Nominal Interest Rate, Overnight Rate
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ECON 1022A/B Full Course Notes
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Chapter 30: monetary policy objectives, bank of canada act, bank controls quantity of money, interest rates and prevent swings in real gdp growth and unemployment. Joint statement of the government of canada and the bank of. Interpretation of the agreement: bank believes core inflation more important than cpi based inflation, rationale for an inflation control target. Inflation control helps financial market traders avoid swings, surprises and volatility. Canada caused recession was early 1990s: responsibility for monetary policy, governing council of the bank of canada: responsible for conduct of monetary policy. Include governor, senior deputy governor and four deputy governors: bank of canada economists, experts who brief governing council to guide monetary policy, consultations with the government, regular consultations between governor and minister of finance. Insert figure 30. 3: equilibrium in reserves market determines the actual overnight rate. If overnight rate above target: bank buys securities to increase reserves, which increases supply of overnight funds and lowers the overnight rate.