https://padlet.com/marieamber889/yr417grrynuvh5t3 an insight into the Bank of Canada's intervention policy that helps keep the Economy afloat. en-us 2020-11-29 16:14:12 UTC 2025-12-14 19:19:03 UTC hello@padlet.com marieamber889 https://padlet.com/marieamber889/yr417grrynuvh5t3/wish/968927461 This website provided by the Bank of Canada, gives an insight into the objective of Monetary Policy and the two main factors that are used to implement it; inflation-control target & flexible exchange rate.

Monetary Policy is an Economic strategy provided by the Bank of Canada that is used to preserve the value of money by maintaining inflation rates between 1-3%. The idea is to keep the rates low, stable and predictable.
 The Macroeconomic objective is to encourage Canadians to spend money comfortably; encourage long-term investments; and contribute to the increase of employment and productivity within the Economy.

Inflation Control Target:
Target is to keep inflation rate between 1-3%. Helps establish appropriate interest rates, for the purpose of maintaining a stable price environment.
Purposes overnight rates for loans between financial institutions; this rate serves at a benchmark for institutions to set interest rates for forms of lending such as consumer loans and mortgages.
Also purposes Short-Term interest rates to achieve inflation target.
Rates are raised to prevent the price environment from inflating above 3%, by discouraging spending and borrowing.
Rates are lowered to prevent inflation rate falling below 1%, by encouraging spending through forms of loans to stimulate the economy.

Canadas Flexible Exchange Rate: 
Referred to as "floating dollar", allows an independent monetary policy more suitable to Economic circumstances within Canada. Its objective is to  achieve the inflation target. 
Shifts in the exchange rate provides a "buffer", allowing Canada's Economy to easily adapt and overcome external and internal shocks. 

This website was very informative in regard to what Monetary Policy is, and what its purposeful objective to the economy is. It was very interesting to learn that Canada has built its economy to adapt to changes, providing a "buffer" in necessary times. ]]> 2020-11-29 16:21:13 UTC https://padlet.com/marieamber889/yr417grrynuvh5t3/wish/968927461 marieamber889 https://padlet.com/marieamber889/yr417grrynuvh5t3/wish/969994967 This website also provided by the Bank of Canada, gives insight into how Monetary Policy Works and What it takes to implement such a policy within the Economy. 

The commitment of the Bank of Canada to keep the inflation rate ideally at 2%, the midpoint the target range. This commitment influences firms and households expectation rates. 
These expectations rates are provided by the credibility of the Bank of Canada, who aims to keep inflation expectations 'anchored'. 
Monetary Policy has a transmission system, essentially a complex chain of cause and effects that are a result of Canadas economic decisions. Ex: changes in asset prices, aggregate demand, output gap and eventually inflation. 

Overnight interest rates are adjusted; two responses occur.
1) Increase in overnight interest rate = increase in long-term interest rates. 
2) Increase in interest rates = increase in financial capital flowing into Canada for higher yields. - ex. less export, more import. 
This allows an easy adjustment within change of quantities, specifically investments, and net exports. 

Monetary policy is a long-term strategy, meaning that it can take months for change in aggravated output to be observed. Current estimates show that the effect on inflation is not apparent until 12-18 months later. 

Prior to being implemented, the Bank of Canada  conducts extensive economic research; theoretical and empirical, to measure out the uncertainties that come with long-term strategies. 

This website was informative in regard to correlation between time and aggravated output. It was interesting to read that although changes may be observed in reality (ie: cerb), the interest rates and actual output cannot be observed until almost a year later.


]]> 2020-11-30 04:55:32 UTC https://padlet.com/marieamber889/yr417grrynuvh5t3/wish/969994967 marieamber889 https://padlet.com/marieamber889/yr417grrynuvh5t3/wish/974049281 This website gives insight into the Monetary policy, what it is, why it matters, and why it is important to target inflation. 

The monetary policy maintains confidence in the value of money, providing stability in the general level of prices. It is a strategy that allows adjustment to short-term interest rates to achieve a growth rate of output, and maintain a low and stable inflation rate.
The bank lends funds to each other for very short periods at overnight interest rates; furthermore, they are willing to extend loans to banks at a rate above the targeted overnight rate, and will pay interest on any deposits that is accepted from banks - but below the targeted overnight rate. This allows a higher lending rate and lower deposit rate, providing the maintenance of a targeted overnight rate. 

Central Banks focus on the control of inflation for two reasons: 
1) Evidence and theory suggest that Monetary Policy can only have systematic and efficient macroeconomic variables on inflation.
2) Inflation is damaging to the economy, due to the uncertainty it generates. A low and stable provides the best economic environment for firms, workers, and consumers to prosper. 

Inflation is directly correlated to uncertainty, both for relative prices and the path of inflation itself. This leads firms and households to make decisions that wouldn't be likely in a certain and low-inflation economy. 
Prices are determined by the interaction of buyers and sellers, this market price transmits information and guides the allocation of economic resources. 
With the presence of inflation and uncertainty, prices can no longer convey the information clearly, as the result of market out-comes lack efficiency that would be achieved in a non-inflationary world.  

This website was informative based on why inflation is the focus of monetary policy and how this relates to prices in our daily lives within firms/households. I chose this website because I felt it was necessary to provide why Monetary Policy matters and why it is extremely crucial for the Economy to maintain a low and stable inflation rate. 

If the link below is not working please refer to this as I had technical difficulties
https://www.mcgill.ca/economics/files/economics/why_monetary_policy_matters_-_a_canadian_perspective_abridged_version.pdf]]> 2020-12-01 01:35:16 UTC https://padlet.com/marieamber889/yr417grrynuvh5t3/wish/974049281 marieamber889 https://padlet.com/marieamber889/yr417grrynuvh5t3/wish/974340476 This is a very short yet interesting video in regards to the Report that was published as a result of Monetary Policy being implemented due to Covid-19. 
It provides that the recovery of the Economy will be slow and a bit unstable at times, but in order to support recovery the Bank will continue to buy bonds to lower the cost of borrowing for Canadians. It provides that the target inflation rate is not where its suppose to be and therefore interest rates will remain low until it reaches 2%. It states that the expected recovery of the inflation target rate will be achieved in 3 years. 
It is interesting to see the simplified and practical insight into the recovery of our economy, what steps are being taken and when we are expected to arrive at our goal in our economy. ]]> 2020-12-01 04:24:30 UTC https://padlet.com/marieamber889/yr417grrynuvh5t3/wish/974340476 marieamber889 https://padlet.com/marieamber889/yr417grrynuvh5t3/wish/974351139 Welcome, this is a simply outlined, yet insightful Padlet based on the Bank of Canada's Monetary Policy. 
This policy is directly related to our money supply, interest rates, and inflation, in which needs to be maintained to allow the economy to thrive. ]]> 2020-12-01 04:32:30 UTC https://padlet.com/marieamber889/yr417grrynuvh5t3/wish/974351139 marieamber889 https://padlet.com/marieamber889/yr417grrynuvh5t3/wish/974360904 This Video is a crash course on monetary policy. It differs from the other video as it focuses on the federal reserve but describes what the reserve does and also touches all the bases of monetary policy without overlapping the information provided in the last video. It talks about money supply and the reasons why this fluctuates, expansionary monetary policy, and contractionary monetary policy supply. It was a very practical way to view monetary policy while recognizing the subject in its complexity. ]]> 2020-12-01 04:39:17 UTC https://padlet.com/marieamber889/yr417grrynuvh5t3/wish/974360904 marieamber889 https://padlet.com/marieamber889/yr417grrynuvh5t3/wish/974362959 This Video provides the insight into the Change of money, and how digital currencies have affected our dollar. It specifies that monetary policy almost ceases to exist as raising the interest rates is extremely difficult given the competitive market that is now available. It talks about the Federal Reserves credibility,  how building assets may decrease the value of the dollar, and lending rates. 
It talks about the upgrade of technology and how this can change monetary policy to fiscal policy, as it allows direct access to cash from central banks. 
It was very interesting to learn how digital currency is evolving and impacting our economic system, and how this can change the function of the federal reserve and central banks overtime .                    ]]> 2020-12-01 04:40:43 UTC https://padlet.com/marieamber889/yr417grrynuvh5t3/wish/974362959 marieamber889 https://padlet.com/marieamber889/yr417grrynuvh5t3/wish/974368672 This Video Provides that a Good Monetary Policy provides good price stability and high employment. 
It gives an insight into the Federal Reserve, specifying facts such as the Fed. Reserve can lend money against banks' good assets and prevent panic and disruption in the economy.
It was a very deep insight presented in a practical way, as it touches the bases of each factor of the monetary policy without a long lecture.
 ]]> 2020-12-01 04:44:39 UTC https://padlet.com/marieamber889/yr417grrynuvh5t3/wish/974368672 marieamber889 https://padlet.com/marieamber889/yr417grrynuvh5t3/wish/974373231 This website gives insight into the Canadian Markets, and the Methodology that Monetary Policy provides. 

The Bank of Canada's main tool is the target of the overnight rate to conduct monetary policy. This informs major financial institutions the average and ideal interest rates that the Bank of Canada wants to observe within the marketplace where money is lent at overnight rates. 
Changing the Overnight rate essentially changes the interest rates of mortgages and prime rates offered by local banks. 

In order to cover their transactions within the day, major financial institutions consistently borrow and lend money overnight. At the end of the day, there may be financial institutions with extra money, and some who need money; therefore, the score needs to settled by trading funds to allow all transactions to be covered amongst all financial institutions. 
If the market rate is moving away from the Target, the Bank is able to intervene the overnight market by adjusting the target rate to set the trend. When the Overnight rate is changed, it communicates which direction it wants short-term rates to end up. This change, correlates to the change of prime rates and indirectly affect mortgage rates/interest paid to consumers within savings or assets. 

Interest rates go down to encourage firms and households to spend more in order to contribute to boosting the economy; however, inflation occurs when the economy grows abruptly, and interest rates need to be increased to slow down inflation and lending/borrowing rates. 

This website provided an interesting insight into the methodology of Monetary Policy, as it provides the different aspects of the market, and how banks are able to determine what the overnight rate should be, and how the change/adjustment of the overnight rate has a direct/indirect correlation to the interest rates offered at commercial banks.

]]> 2020-12-01 04:47:46 UTC https://padlet.com/marieamber889/yr417grrynuvh5t3/wish/974373231 marieamber889 https://padlet.com/marieamber889/yr417grrynuvh5t3/wish/977240071 This image is a graph stating the annual inflation rate provided in 2020, and portrays the downfall that occurred in regard to inflation through the cause of the Corona Pandemic. 
It shows that there was a maintenance to keep the inflation rate between two points on the graph, which was not obtainable when the first wave abruptly occurred, as there was excessive uncertainty. ]]> 2020-12-01 19:17:05 UTC https://padlet.com/marieamber889/yr417grrynuvh5t3/wish/977240071 marieamber889 https://padlet.com/marieamber889/yr417grrynuvh5t3/wish/977295496 This graph provides a comparison of the inflation rate in Canada and the US. As you can see the inflation rate decreased drastically in Canada in the beginning of the pandemic. 
Its also interesting to see that there was a immediate response in the inflation rate; although statistics show that it takes at least a year to be observed. ]]> 2020-12-01 19:28:32 UTC https://padlet.com/marieamber889/yr417grrynuvh5t3/wish/977295496 marieamber889 https://padlet.com/marieamber889/yr417grrynuvh5t3/wish/977370710 This image is a chart of how Monetary Policy functions. 
Inflation causes two types of uncertainty, one which can be indicated by the pink balloons, which provides that linkage between the macroeconomic variables. 
The second type of uncertainty is shown in the yellow indicators that provide uncertainty about current and future developments.


]]> 2020-12-01 19:44:19 UTC https://padlet.com/marieamber889/yr417grrynuvh5t3/wish/977370710 marieamber889 https://padlet.com/marieamber889/yr417grrynuvh5t3/wish/977416883 This image provides a graph for the targeted overnight rate in Canada, since the 2000-2020. 
Depending on the given circumstances in the economy, the overnight rate is adjusted to influence financial institutions to borrow/lend and in turn, encourage firms and households to spend. 
The overnight rate has declined in 2009 (post '08 financial crisis), and also in 2020, (the pandemic), as the decline of interest rates influences spending and boost the economy into recovery.]]> 2020-12-01 19:54:30 UTC https://padlet.com/marieamber889/yr417grrynuvh5t3/wish/977416883 marieamber889 https://padlet.com/marieamber889/yr417grrynuvh5t3/wish/982259308 1. The most interesting thing I learned about this topic is the fact that the target inflation rate is studied as if it is a science of money, and there are so many factors that apply to the function of Monetary Policy. I also found it very interesting to learn about the advancement of technology and how digital currencies essentially decrease our dollar rate over time. 
2. A real life example would be the policy being implemented in the 2008 Financial Crisis, and also during the Corona Pandemic that we are going through during 2020. 
3. If I could pass on knowledge to any family/friend, I would let them know to watch the rate of interest, to determine the best times to invest. ]]> 2020-12-03 01:25:43 UTC https://padlet.com/marieamber889/yr417grrynuvh5t3/wish/982259308