Description
The Bank of Canada (BoC) sets and publishes the Policy Interest Rate, which is the benchmark rate for overnight loans to commercial banks. This rate significantly impacts Canada's economic activity and inflation. The BoC targets a 2% inflation rate; when the economy overheats or inflation pressures rise, the BoC typically raises rates to curb demand. Conversely, when the economy slows or inflation is too low, the BoC lowers rates to stimulate activity.
The BoC holds eight interest rate decision meetings annually and often aligns its policy direction with the US monetary policy.