(16)Since mid-1994, the operational objective of the Bank of Canada\'s monetary

Question

(16)Since mid-1994, the operational objective of the Bank of Canada's monetary policy has been to keep the Select one: a. Bank rate fixed. b. overnight rate outside a band of 50 basis points. c. overnight rate inside a band of 150 basis points. d. overnight rate within a band of 50 basis points. (16)Since mid-1994, the operational objective of the Bank of Canada's monetary policy has been to keep the Select one: a. Bank rate fixed. b. overnight rate outside a band of 50 basis points. c. overnight rate inside a band of 150 basis points. d. overnight rate within a band of 50 basis points. Select one: a. Bank rate fixed. b. overnight rate outside a band of 50 basis points. c. overnight rate inside a band of 150 basis points. d. overnight rate within a band of 50 basis points.

Explanation / Answer

For conduct of monetary policy, the main tool used by the Bank of Canada is the Target for the overnight rate.

Bank of Canada has devised a system of operating band and overnight rate was kept within this band.

This operating band was 50 basis point wide and overnight rate was kept inside this band.

So,

Since mid-1994, the operational objective of the Bank of Canada's monetary policy has been to keep the overnight rate within a band of 50 basis points.

Hence, the correct answer is the option (d).

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