Monetary policy implementation

• December 11, 2007

  The Zero Bound on Nominal Interest Rates: Implications for Monetary Policy

  Bank of Canada Review - Winter 2007-2008 Claude Lavoie, Stephen Murchison

  One of the most important factors that must be considered if countries are thinking about lowering the target level of inflation much below 2 per cent is the zero interest bound. Targeting inflation rates that are too low, the authors note, may restrict the ability of monetary policy to respond to economic shocks by limiting the amount by which interest rates can be eased.

  Content Type(s): Publications, Bank of Canada Review articles Topic(s): Inflation: costs and benefits, Interest rates, Monetary policy implementation
• April 14, 2007

  The Canadian Overnight Market: Recent Evolution and Structural Changes

  Bank of Canada Review - Spring 2007 Christopher Reid

  Since 1997 when the Bank of Canada last published a review of the Canadian overnight market, several important changes have affected the market's structure and dynamics. Reid provides a current overview of the market, examining the financial instruments, market transparency and flows, and the collateralized overnight rate as it has evolved since the introduction of the Large Value Transfer System and the fixed announcement dates. Other significant influences include changes in market practices regarding risk management, the rise of securities lending, the increased demand for collateral, and the Bank of Canada's measures to reinforce the target for the overnight rate.

  Content Type(s): Publications, Bank of Canada Review articles Topic(s): Market structure and pricing, Monetary policy framework, Monetary policy implementation

• Perhaps the FOMC Did What It Said It Did: An Alternative Interpretation of the Great Inflation

  Staff Working Paper 2007-19 Sharon Kozicki, P. A. Tinsley

  This paper uses real-time briefing forecasts prepared for the Federal Open Market Committee (FOMC) to provide estimates of historical changes in the design of U.S. monetary policy and in the implied central-bank target for inflation. Empirical results support a description of policy with an effective inflation target of roughly 7 percent in the 1970s.

  Content Type(s): Staff research, Staff working papers Topic(s): Central bank research, Monetary aggregates, Monetary policy implementation JEL Code(s): E, E3, E5, N, N1