Economics 1022A/B Chapter Notes - Chapter 30: Open Market Operation, Real Interest Rate, Overnight Rate

• School: Western University
• Department: Economics
• Course: Economics 1022A/B
• Professor: Jeannie Gillmore

Document Summary

Joint statement of government of canada and boc of 2011. Inflation rate targeting: monetary policy strategy in which the central bank commits to an explicit inflation target and explain how its actions will achieve that target. The target will continue to be defined in terms of the 12-month rate of change in the total cpi. The inflation target will continue to be 2% midpoint of the 1-3% inflation control range. The purpose of the boc"s policies is more clearly understood by financial market traders. The target provides an anchor for expectations about future inflations. The focus on inflation permits the unemployment rate to rise or the real gdp growth rate to suffer. Boc created a recession in the 1990s while facing a double digit inflation rate. When they are in disagreement, the minster would direct the bank, which it is then required to oblige (with possible resignation of the governor)