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🌏 | Bank of Canada to consider additional rate hike by 6bp at June meeting = Governor


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Bank of Canada to consider additional 6bp rate hike at June meeting = Governor

 
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How much the policy rate should be raised depends on how the Canadian economy reacts to the rate hike and how the inflation outlook changes.
 

[Ottawa XNUMXth Reuters] – Bank of Canada (Central Bank) Governor McClem will meet next June XNUMXth ... → Continue reading

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Wikipedia related words

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    Inflation outlook

    Policy interest rate

    Policy interest rate(Seisaku Kinri,British: bank rate) IsCentral BankBut the generalbank(Commercial bank)LoanWhen doinginterest rate.

    Central bankFinancial PolicyDetermined byBusinessIs set high when is good and low when the economy is bad. This will help when the economy is goodSavings,loanInterest rates have risen,currencyThe distribution of is suppressed. When the economy is bad, interest rates are lowered, which has the implication of promoting currency circulation.

    Policy interest rates in Japan

    Official discount rate

    1994(6)9Up toPrivate bank Ofinterest rate TheOfficial discount rateIt was regulated to interlock with (Kouteibuai)[1].. Official discount rateBank of JapanThis is the base interest rate applied when the Bank of Japan lends to a private bank. Changing the official discount rate is equivalent to changing the market interest rate in Japan, and the BOJ operates the official discount rate.Financial PolicyCould be done. Therefore, the official discount rate has long served as a policy interest rate for Japan.

    But,1994(6)10In addition, private bank interest rates are completely liberalized[1], It is no longer possible to use the official discount rate to manipulate private bank interest rates. The Japanese economy continues to deteriorate, and in the past, the official discount rate should have been lowered to lower interest rates.1995(Heisei 7) From January2001(13)2Until the official discount rate was not lowered, it remained at 0.5%.

    After full deregulation of interest rates on private banks, private banks operate and raise funds instead of manipulating official discount ratesMoney marketInterest rate (Unsecured call overnightContinue monetary policy by manipulating the interest rate. In particularOpen market operationsWill allow the Bank of Japan toGovernment bond,BillBuyBuying operation(Buy operation) And continued to lower interest rates. Until March 1995, the official discount rate isOvernight call rateThe operation of the official discount rate was important because it was set at a lower level, but the overnight call rate is lower than the official discount rate thereafter.[2].

    Unsecured call overnight

    1999 yearsZero interest rate policyByUnsecured call overnightWas set as an inducing target and played the role of a policy interest rate. The current official discount rate serves as a ceiling on interest rates in money markets. BOJ2000(12)8ToZero interest rate policyWas canceled,Financial insecurityTo prevent2001(13)2ToLombard loan systemWas introduced. Poorly managed private banks have poor credit, which makes them unable to borrow in the money market or, even if they can, borrow at very high interest rates. This could lead to financial insecurity. To prevent thiscollateralIf there is, the BOJ has decided to lend to a private bank at the official discount rate without restrictions. With collateral, private banks were able to control financial instability by guaranteeing borrowing at the official discount rate, no matter how high. After that, the BOJ gradually lowered the official discount rate.2001(13)9/11 OfAmerican terrorist attacksThe Bank of Japan has lowered the official discount rate to a record low of 0.1% as a result of heightened financial instability.2006(18)7/14To2001(13) The zero interest rate policy, which had been re-implemented from March, was lifted and the official discount rate became 3%.2007(19)2/21The official discount rate was raised to 0.75%, but it was 2013% as of May 5.

    Name change of "official discount rate"

    The Bank of Japan2006(18)8/11Changed the name of the statistics on "official discount rate" to no longer use the name "official discount rate"Standard discount rate and standard loan interest rateAnnounced.

    This is because when the BOJ's operation target for controlling the financial markets is the interest rate on the money markets (interest rate for overnight unsecured calls/call rate), the Bank of Japan, which has been called the official discount rate until then, lends funds directly to financial institutions. This is because the base interest rate (base loan interest rate) has become less relevant as a policy interest rate, which is a measure of deposit and savings interest rates and bank lending rates. The official discount rate is the complementary lending system introduced in 2001 (Lombard loan system) Is the applicable interest rate, it will be the maximum interest rate when the BOJ induces the call rate.

    Abolish interest rate target

    In April 2013, the Bank of JapanQuantitative and qualitative monetary easing”, the operation target of financial market adjustment is from unsecured overnight call ratesMonetary baseWas changed to[3].

    Introduction of negative interest rate and yield curve control

    2016 Year of 1 MonthNegative interest rateSince various harmful effects due to the introduction have been pointed out, the long-term interest rate will be manipulated at the September 2016 meeting with the limit operation of long-term government bonds (mainly 9-year bonds).Yield curve・ It came to be done by control (long-short interest rate operation)[4].

    Policy interest rate of each country

    The induced target interest rates of central banks of major countries are as follows.

    Induced target interest rates (policy interest rates) of major central banks[5]
    CountryName of induced target interest rateCharacteristic of induced target interest rate
    British flag United Kingdombank rateO/N, central bank deposit rates
    Canadian flag CanadaTarget for Overnight RateO/N, interbank
    Australian flag Australiacash rateO/N, interbank
    European Union flag Euro areakey ECB interest rateMain Refinancing Operation
    (Mainly the operation interest rate for one week)
    New Zealand flag New ZealandOfficial Cash RateO/N, interbank
     SwedenRepo rate7-day central bank deposit/lending rates
    Swiss flag Switzerland3-month Libor interest rate3 months, private bank offered interest rate
    United States flag The United States of Americafederal fund rateO/N, interbank

    footnote

    [How to use footnotes]
    1. ^ a b Hideomi Tanaka, Deflationary Depression, The Deadly Sins of the Bank of Japan, Asahi Shimbun, 2010, p. 221.
    2. ^ Takashi Oshio, "Introduction to Economics for High School Students," Chikuma Shobo <Chikuma Shinsho>, 2002, 177 pages.
    3. ^ BOJ introduces "quantitative and qualitative easing" List of target balances for each assetNihon Keizai Shimbun January 2013, 4
    4. ^ 2% "Price stability target" and "Quantitative and qualitative monetary easing with long- and short-term interest rate manipulation": Bank of Japan
    5. ^ Shirakawa [2008] p.128 Table 7-1-1 Induced target interest rates of central banks of major countries (policy target) O/N represents overnight interest rates for unsecured calls.

    References

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