This is the rate of interest, which the Bank of Canada wants to see as an average rate in the market of short-term deposits. The overnight rate target from the Bank of Canada is the main interest rate in the country, this is the main rate in the relationship of major financial institutions. To control the level of interest rates in the overnight market Bank of Canada sets the so-called operating range of 0.50, the middle of which is always the Overnight Rate Target.
High interest rates reduce the growth of consumer lending and stimulate the growth of savings, which leads to slower economic growth. The growth of rates usually leads to an increase in capital inflows and the growth of the national currency in the medium term, however, if growth rates are not based on high rates of economic growth, it could lead to economic stagnation and negative impact on the currency markets in the long term.