publication . Preprint . 2010

Greater Transparency Needed

Angelo Melino; Michael Parkin;
Open Access
  • Published: 01 Jul 2010
Abstract
Financial market participants would benefit from a better understanding of how the Bank of Canada sets the overnight interest rate in response to economic developments. More accurate forecasts of the Bank’s future policy choices would lead to better financial decisions and better price and wage-setting decisions, making it easier for the Bank to hit its 2 percent inflation target. Currently, the Bank’s internal model predicts a path for the overnight rate that is inconsistent with the expectations of the Bank’s Governing Council. The Bank could achieve greater transparency by publishing its own conditional forecasts of the future path of the overnight rate or, f...
Subjects
free text keywords: Monetary Policy, Bank of Canada, overnight interest rate, inflation target, jel:E52, jel:E58
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