391017
Description
Flashcards by alistairewart, updated more than 1 year ago
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Created by alistairewart
over 10 years ago
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| Question | Answer |
| Monetary policy objective | a central bank goal regarding a macro-econmic indicator that the bank influences. |
| Inflation-control target | refers either to the rage of annual inflation rates within which the central bank aims to keep actual inflation or to the midpoint of the target range |
| Total CPI | synonym for the CPI |
| Core CPI | Measure of the price level that excludes the most volatile components of the CPI.. (Fruit, vegetables and gasoline) for canada |
| total cpi inflation | rate of change for the total cpi |
| core cpi inflation | rate of change for the core CPI |
| Monetary Policy Instrument | a tool or technique that a central bank uses to achieve a monetary policy objective. |
| modern central banking theory | the view that the central bank changes its key policy rate (interest rates) directly and commercial banks respond by changing market interest rates. |
| official interest rates | a general term for the interest rate which the central bank controls to achieve its monetary policy objective a term for the key policy rate of a central bank |
| key policy rate | official interest rate for the bank of canada |
| Prime Business Rate//prime rate | the interest rate that commercial banks charge to their least risky business borrowers |
| benchmark rate | an interest rate upon which other interest rates are based |
| Overnight rate target | the interest rate that the bank of canada wants to prevail in the financial market where major canadian institutions borrow and lends funds to settle daily transactions with eachother |
| overnight rate | the market interest rate that financial institutions charge each-other for overnight loans |
| large value transfer system | an electronic wire system overseen by the bank of canada that allows major financial institutions operating in canada to send large payments bank and forth |
| settlement balances | accouns held at the bank of canada by financial institutions for the purpose of settling their net payment obligations to one another |
| operating band | a term used by the bank of canada to describe the rate of possible overnight interest rates from .25% points below the overnight rate to .25% above the target |
| operating band |
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| Deposit rate | the interest rate that the bank of canada pays commercial banks for the overnight deposits (lower band of the operating band) |
| Bank Rate | the interest rate that the bank of canada charges commercial banks for overnight loans (upper limit of band) |
| basis point | 1 100th of a % point |
| interest rate spread | the difference often measured in basis points between a benchmark interest rate and a related market interest rate (often overnight rates and mortgage lending rates) |
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