Monetary Policy Institute Blog #90, by John Smithin

“It is significant that the Bank of Canada is now explicitly using the expression ‘policy rate of interest’.

Back in the day, when I was teaching university courses in ‘Money and Banking’, it was identified simply as the ‘overnight rate’, i.e., the rate determined in the overnight market for ‘federal funds’ (to use the American term).

It required some effort in those days to demonstrate to the students that it really was a policy variable. Now the Canadian central bank openly admits it.”