Question: Using the following information, explain how the BOC uses the channel corridor system to achieve their target for the overnight interest rate. Assume that the

  1. Using the following information, explain how the BOC uses the channel corridor system to achieve their target for the overnight interest rate. Assume that the BOC would like the real overnight interest rate to increase by 0.5% and is maintaining a 0.5% operating band. Current Rates: Bank Rate=0.75% Policy Rate=0.50% Rate on Excess Reserves=0.25% Inflation Rate 5.5%. Please draw graph.

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