https://padlet.com/kyle_dsouza96/d5mby8xu7vxq A lesson on the Canadian Monetary Policy en-us 2018-12-04 01:22:18 UTC 2024-05-17 12:51:34 UTC hello@padlet.com https://padlet-assets.s3.amazonaws.com/icons/Growing.png kyle_dsouza96 https://padlet.com/kyle_dsouza96/d5mby8xu7vxq/wish/310711580 By Kyle D'souza]]> 2018-12-04 01:25:29 UTC https://padlet.com/kyle_dsouza96/d5mby8xu7vxq/wish/310711580 kyle_dsouza96 https://padlet.com/kyle_dsouza96/d5mby8xu7vxq/wish/310714800 Welcome to my padlet wall. The topic that will be explained is on Canada's Monetary Policy. What you can expect to learn from this policy is the objective of monetary policy in Canada. Other things that will be discussed is how the Bank of Canada controls the inflation rate, and how the Bank of Canada influences interest rates.]]> 2018-12-04 01:45:32 UTC https://padlet.com/kyle_dsouza96/d5mby8xu7vxq/wish/310714800 kyle_dsouza96 https://padlet.com/kyle_dsouza96/d5mby8xu7vxq/wish/310716472 Monetary Policy entails implementing actions from the Bank of Canada to determine the economic activity within Canada. Two forces that impact monetary policy are the money supply and interest rates which are aimed to control inflation and regulate the growth and liquidity. For example, if Canada has a high unemployment rate, often resulting in a recession, the Bank of Canada can introduce an expansion policy which helps expand the economic activity.]]> 2018-12-04 01:56:26 UTC https://padlet.com/kyle_dsouza96/d5mby8xu7vxq/wish/310716472 kyle_dsouza96 https://padlet.com/kyle_dsouza96/d5mby8xu7vxq/wish/310719468 The bank rate is the rate the Bank of Canada   charges on loans to the major financial institutions in Canada. In this video, published in July, the Bank of Canada raised the benchmark for the overnight rate to 1.5%. The reason for this is because the inflation rate has been the highest ever in seven years. The article then goes on to discuss how the inflation rates are going to affect the Canadian trade with the United States (Canadian exports)]]> 2018-12-04 02:13:41 UTC https://padlet.com/kyle_dsouza96/d5mby8xu7vxq/wish/310719468 kyle_dsouza96 https://padlet.com/kyle_dsouza96/d5mby8xu7vxq/wish/310720919 This image shows the operating bank at which the bank rate and the overnight rate are determined. The overnight rate is the midpoint of the operating band which is half a percentage point wide.]]> 2018-12-04 02:22:14 UTC https://padlet.com/kyle_dsouza96/d5mby8xu7vxq/wish/310720919 kyle_dsouza96 https://padlet.com/kyle_dsouza96/d5mby8xu7vxq/wish/310724470 The Bank of Canada approved the inflation-control target in 1991. This target of inflationary control is there to keep consumer price index inflation at a 2 percent midpoint, 1 to 3 being the target range. The inflation-control target benefit is there to hold steady the rate of future inflation. This then leads to individuals, businesses and government to bring non-inflationary growth to the Canadian economy.]]> 2018-12-04 02:42:44 UTC https://padlet.com/kyle_dsouza96/d5mby8xu7vxq/wish/310724470 kyle_dsouza96 https://padlet.com/kyle_dsouza96/d5mby8xu7vxq/wish/310729042 When the overnight rate changes other interest rates with a short or long term maturity change as well. Whether the rate goes up or down will determine the cost of borrowing for a 1-day period being cheaper or more expensive. Because there is uncertainty in the global financial markets, the cost of raising funds for Canadian banks have increased, which is being passed on to borrowers from banks. The less creditworthy you are the higher premium rates will be given to you.]]> 2018-12-04 03:08:43 UTC https://padlet.com/kyle_dsouza96/d5mby8xu7vxq/wish/310729042 kyle_dsouza96 https://padlet.com/kyle_dsouza96/d5mby8xu7vxq/wish/310731486 Banks are independent businesses and because of this they are entitled to set their own lending rates. Even though financial institutions can set their own rate the Bank of Canada determines if the rate will rise or decrease. This is because financial institutions borrow from the Bank of Canada and if the overnight or bank rates increase then the smaller banks will have to increase their rate to make up for the rates they borrowed money from the Bank of Canada.]]> 2018-12-04 03:23:10 UTC https://padlet.com/kyle_dsouza96/d5mby8xu7vxq/wish/310731486 kyle_dsouza96 https://padlet.com/kyle_dsouza96/d5mby8xu7vxq/wish/310733547 Short term interest rates apply to all money lent out for a period of one year or less. Long term interest rates can be either higher or lower then short term rates depending on the term of the loan, inflation and economic growth.]]> 2018-12-04 03:34:43 UTC https://padlet.com/kyle_dsouza96/d5mby8xu7vxq/wish/310733547 kyle_dsouza96 https://padlet.com/kyle_dsouza96/d5mby8xu7vxq/wish/310734625 Nominal Interest rate refers to an interest rate that does not take into consideration the inflation. A real interest rate adjusts for inflation giving the most accurate rate. The way you calculate the real interest rate is you take the nominal rate and you subtract it from the inflation rate. The real interest rate is the rate that lenders or people that invest receive to give them a better idea if their purchasing power is increasing or decreasing.]]> 2018-12-04 03:41:00 UTC https://padlet.com/kyle_dsouza96/d5mby8xu7vxq/wish/310734625 kyle_dsouza96 https://padlet.com/kyle_dsouza96/d5mby8xu7vxq/wish/310737366 The nominal rate, in relation to banks, is used to determine the amount at which borrowers pay to use the lenders money (Usually banks to individuals, businesses, or other banks). If the nominal rate on a loan is 5% then borrowers can expect to pay $5 of interest for every $1000 loaned to them.]]> 2018-12-04 03:58:44 UTC https://padlet.com/kyle_dsouza96/d5mby8xu7vxq/wish/310737366 kyle_dsouza96 https://padlet.com/kyle_dsouza96/d5mby8xu7vxq/wish/310739997 Canada's Monetary Policy]]> 2018-12-04 04:19:07 UTC https://padlet.com/kyle_dsouza96/d5mby8xu7vxq/wish/310739997