How Soon? How Fast? Interest Rates and Other Monetary Policy Decisions in 2010
AbstractWith the economic recovery taking hold and the Bank of Canada’s conditional commitment to keep the overnight rate at 0.25 percent expiring soon, a number of questions about the conduct of monetary policy need to be considered. The author argues the Bank should keep its conditional commitment, but should thereafter raise the overnight rate sharply by 50 basis points at every announcement date until mid-2011. In addition, the Bank should publish conditional statements about the future path of the policy rate to help shape market expectations and avoid surprises that disrupt financial markets, output, and employment. Further, the Bank should withdraw its injection of excess reserves at a future preannounced date and should gradually wind down credit easing measures.
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Bibliographic InfoPaper provided by C.D. Howe Institute in its series e-briefs with number 92.
Length: 8 pages
Date of creation: Feb 2010
Date of revision:
Publication status: Published on the C.D. Howe Institute website, February 2010
Monetary Policy; Bank of Canada; overnight interest rate;
Find related papers by JEL classification:
- E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
- E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
This paper has been announced in the following NEP Reports:
- NEP-ALL-2010-03-06 (All new papers)
- NEP-CBA-2010-03-06 (Central Banking)
- NEP-MAC-2010-03-06 (Macroeconomics)
- NEP-MON-2010-03-06 (Monetary Economics)
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