Targeting the Interest Rate LO5

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Targeting the Interest Rate

Overnight interest rate the interest rate that commercial banks charge one

another on overnight loans

Bank ratethe rate of interest payable by the commercial banks

on loans from the Bank of Canada

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Targeting the Interest Rate

Target for the overnight rate the Bank of Canada’s key policy interest rate. It is

the midpoint of the Bank’s 50-basis-point operating band

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Targeting the Interest Rate LO5

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Bank rate 2.75%

Target for the overnight rate 2.5%

Bankers deposit rate 2.25%

The rate the commercial banks pay the Bank of Canada on loans

The rate that the Bank of Canada pays commercial banks on deposits