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Bank of Canada Overnight Rate

Also known as the interest rates or key interest rate, this is the main interest rate used by the Bank of Canada (BOC) o refinance its operations, providing liquidity to the secondary level of the banking system. The rate is set by the governing council members at the BOC. The BOC generally decides to increase interest rates when the economy is performing well and inflation is increasing. This means that the borrowing costs of banks would increase causing the availability and liquidity to fall. This is supposed to strengthen the CAD. However, because the interest rate decisions are usually priced in by the market, the effect they have on the currency diminishes. Instead, the accompanying statement has a greater impact on the CAD.
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