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We have been talking about the Bank of Canada and its role in monetary regulation this week. I believe that controlling the money supply is
We have been talking about the Bank of Canada and its role in monetary regulation this week. I believe that controlling the money supply is the Bank of Canada's most significant function. They buy, sell, and resell government bonds as well as purchase agreements for their repurchase. They also adjust overnight interest rates. The way they change overnight rates and decide what they will do if they will buy, sell, resell, and repurchase in order to influence the economy intrigues me. I am totally aware of their responsibility to maintain the targeted rate of inflation. In order to keep inflation from falling below the target during a slowdown, the Bank of Canada reduces the overnight interest rate. In a boom period, the opposite would be true. Would you think that the Government of Canada will have a power over the decisions being made by Bank of Canada
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