This is a tough one to understand.
The Bank of Canada is struggling to keep the overnight rate below target so it`s increasing the target for the minimum daily level of settlement balances to $250 million, from its current level of $25 million.
Various indicators of the overnight interest rate have recently been slightly, but persistently, above the Bank’s target for the overnight rate, indicating some ongoing frictions in the system.
Banks should be lending to each other at the target rate but they`re demanding higher rates. It`s probably nothing but it could mean someone is in trouble.
