In this year, the Bank of Canada raised the target for overnight rate consistently and continuously. The rate changes are as follows:
|
Date
|
Target (%)
|
Change (%)
|
|
19 October 2010
|
1.00
|
---
|
|
8 September 2010
|
1.00
|
+ 0.25
|
|
20 July 2010
|
0.75
|
+ 0.25
|
|
1 June 2010
|
0.50
|
+ 0.25
|
- What is the economic reasoning behind this behaviour? Do you think that this policy is appropriate for responding the current Canadian and world economies?
- In early this year, some countries in Europe (such as Greece earlier and Spain recently) faced serious financial crises, and they increased economic insecurities in Europe and the rest of the world. Don't you think that this monetary policy conducted by the Bank of Canada may conflict with this regional economic crisis? Explain.