Canada

Rate expectations: What is the unbiased rate and why did the Bank of Canada adopt it?

The Bank of Canada’s interest rate ruling on Wednesday did not lead to cuts, but it did provide additional clues about the direction the central bank believes interest rates might take. The bank kept its overnight interest rate at 5%, but raised something else: its nominal interest rate is unbiased. The fair rate is the rate at which the central bank’s financial policy neither stimulates nor slows down the economy. It’s the Goldilocks interest rate, Sheila Block explained.

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