The Target for the Overnight Rate

The Bank carries out monetary policy by influencing short-term interest rates. It does this by raising and lowering the target for the overnight rate.

The overnight rate is the interest rate at which major financial institutions borrow and lend one-day (or "overnight") funds among themselves; the Bank sets a target level for that rate. This target for the overnight rate is often referred to as the Bank's key interest rate or key policy rate.

Changes in the target for the overnight rate influence other interest rates, such as those for consumer loans and mortgages. They can also affect the exchange rate of the Canadian dollar.

In November 2000, the Bank introduced a system of eight "fixed" dates each year on which it announces whether or not it will change the key policy rate (see Schedule, at right.)

More information: backgrounder

Implementation of Fixed Announcement Dates

A New System of Fixed Dates for Announcing Changes to the Bank Rate

Information paper (2000).

Summary of Consultation Results

All respondents registered their support for the Bank's decision to move to fixed announcement dates.

Monetary Policy Implementation/LVTS-Related

Operating band, settlement balances, special operations, etc.