1. Targeting the Interest Rate LO5 9- 1© 2012 McGraw-Hill Ryerson Limited

2. Targeting the Interest Rate Overnight interest rate the interest rate that commercial banks charge one another on overnight loans Bank rate the rate of interest payable by the commercial banks on loans from the Bank of Canada LO5 9- 2© 2012 McGraw-Hill Ryerson Limited

3. Targeting the Interest Rate Target for the overnight rate the Bank of Canada’s key policy interest rate. It is the midpoint of the Bank’s 50-basis-point operating band LO5 9- 3© 2012 McGraw-Hill Ryerson Limited

4. Targeting the Interest Rate LO5 9- 4© 2012 McGraw-Hill Ryerson Limited Bank rate 2.75% Target for the overnight rate 2.5% Bankers deposit rate 2.25% The rate the commercial banks pay the Bank of Canada on loans The rate that the Bank of Canada pays commercial banks on deposits