Answer to Question #83674 in Macroeconomics for sachdeep

Question

In September​ 2015, the unemployment rate was 7.0​ percent, the inflation rate was 0.1​ percent, and the overnight loans rate target was 0.5 percent. In September​ 2017, the unemployment rate was 6.2​ percent, the inflation rate was 1.4​ percent, and the overnight loans rate target was 1.0 percent.
Why might the Bank of Canada decide to raise the overnight loans rate in​ 2018?
The Bank Canada might decide to raise the overnight rate in 2018 if​ _______.

Answer 1

The Bank of Canada might decide to raise the overnight rate in 2018 if it wants to keep inflation from running too hot, because it increased from 0.1 to 1.4 percent.