EC140 Chapter Notes - Chapter 30: Open Market Operation, Overnight Rate, Loanable Funds
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EC140 Full Course Notes
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Objective: control quantity of money and ir to avoid inflation, prevents excessive swings in. The bank of canada conducts monetary policy, it is an arms-length organization. Not a government department but is owned by them. Policies are implemented with less political influence, easier to manage economy. Policy is: inflation is kept in a band between 1-3% a yr, target of 2%. > fewer surprises and mistakes on the part of saves and investors called transparency and businesses are better able to anticipate future rates and inflation and therefore make better investments. > anchors expectations about future inflation > promotes stable, consistent economic growth. The boc achieves its objectives mainly by altering money supply. It has the option to set the quantity of money, the exchange rate and the short term ir. The boc cannot set more than one of these at a time and it must let the other two vary.
