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100 Results

Why Do Central Banks Smooth Interest Rates?

Staff Working Paper 2001-17 Gabriel Srour
It is commonly observed that central banks respond gradually to economic shocks, moving the interest rate in small discrete steps in the same direction over an extended period of time. This paper examines the empirical evidence regarding central banks' smoothing of interest rates, paying particular attention to the case of Canada.
Content Type(s): Staff research, Staff working papers Topic(s): Monetary policy implementation JEL Code(s): E, E5

Reactions of Canadian Interest Rates to Macroeconomic Announcements: Implications for Monetary Policy Transparency

Staff Working Paper 2001-5 Toni Gravelle, Richhild Moessner
In this study we statistically quantify the reactions of Canadian and U.S. interest rates to macroeconomic announcements released in Canada and in the United States. We find that Canadian interest rates react very little to Canadian macroeconomic news and are significantly affected by U.S. macroeconomic news, which indicates that international influences on the Canadian fixed-income markets are important.

On Commodity-Sensitive Currencies and Inflation Targeting

Staff Working Paper 2001-3 Kevin Clinton
Two aspects of the recent monetary history of Canada, Australia, and New Zealand stand out: the sensitivity of their dollars to prices of resource-based commodities, and inflation targeting. This paper explores various aspects of these phenomena.

Greater Transparency in Monetary Policy: Impact on Financial Markets

Technical Report No. 86 Philippe Muller, Mark Zelmer
Measures have been taken by the Bank of Canada to increase the transparency of Canadian monetary policy. This paper examines whether the greater transparency has improved financial markets' understanding of the conduct of monetary policy.
November 11, 1998

A primer on the implementation of monetary policy in the LVTS environment

The author summarizes the objectives and key elements of the framework that the Bank will use to implement monetary policy under the new payments system. The article includes a comparison of the key features of the pre-LVTS framework with that to be used in the LVTS environment. It also features a glossary of terms with respect to the Bank's monetary policy operations.
December 13, 1997

The overnight market in Canada

The overnight market is an active forum where participants with a temporary surplus or shortage of funds can lend or borrow until the next business day. The level of interest rates in the overnight market has always been closely linked to the Bank of Canada's monetary policy operations. In this article, the authors describe the evolution of the market from its roots in the 1950s, the development of the Bank's monetary policy operations in the market, and how the market operates today. They also examine the outlook for the overnight market, particularly the implications of the new Large-Value Transfer System.

Constraints on the Conduct of Canadian Monetary Policy in the 1990s: Dealing with Uncertainty in Financial Markets

Technical Report No. 80 Kevin Clinton, Mark Zelmer
Canada's economic performance in the first half of the 1990s was adversely affected by high premiums in interest rates that were brought on by political and economic uncertainties.

Implementation of Monetary Policy in a Regime with Zero Reserve Requirements

Staff Working Paper 1997-8 Kevin Clinton
Monetary policy can be implemented effectively without reserve requirements as long as cost incentives ensure a predictable demand for settlement balances. A central bank can then achieve the level of short-term interest rates that it desires, using market-oriented instruments only.
Content Type(s): Staff research, Staff working papers Topic(s): Monetary policy implementation JEL Code(s): E, E5, E52
November 8, 1996

Money markets and central bank operations: Conference summary

This article summarizes the proceedings of a conference hosted by the Bank of Canada in November 1995. The conference examined the interaction between monetary policy operations and the money market. It provided an opportunity to assess current operations before the introduction of a large-value transfer system leads the Bank to change the techniques it uses to implement monetary policy on a day-to-day basis. From the Bank's perspective, the papers prepared externally provided some useful insights into recent innovations in money markets and their implications for the implementation of monetary policy. Meanwhile, the sessions devoted to the Bank's operations in financial markets were designed to provide market practitioners and academics with further insight into how the Bank operates in these markets.
August 9, 1995

Uncertainty and the transmission of monetary policy in Canada (HERMES-Glendon Lecture)

Gordon Thiessen, Governor of the Bank of Canada, delivered the HERMES-Glendon Lecture at York University, Toronto, in March 1995. The speech focussed on the interrelationships of uncertainty and the transmission of monetary policy to the economy. It looked at how the various types of uncertainty influence the behaviour of economic actors, and at how uncertainty affects the transmission of monetary policy through the economy. The first part of the lecture outlines the Bank of Canada's view of the transmission mechanism, with considerable attention paid to the role of uncertainty. In the second part, the various ways in which the Bank has tried to reduce uncertainty are discussed. The various kinds of uncertainty that impinge on the economy and on the policy process are addressed.
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