Figure15-11Tracking Monetary Policy Using the Core Inflation Rate and the Output Gap Panel (a) shows that the BOC tends to raise the overnight target rate when the inflation rate is high and lower it when inflation is low. Panel (b) shows that the overnight target rate is usually increased when the output gap is positive—that is, when actual real GDP is above potential output—and is decreased when the output gap is negative.
Sources: Parliamentary Budget Officer (PBO); Statistics Canada.