(a) Why would no commercial bank borrow at a rate above the Bank Rate on the overnight market?  (b) Why would no commercial bank lend at a rate below 3.75 percent on the overnight market?

ENGR.ECONOMIC ANALYSIS
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Chapter1: Making Economics Decisions
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Suppose that the Bank of Canada engages in monetary tightening, raising its Overnight Rate Target from 0.25 to 4 percent, so as to ‘build back better.’


(a) Why would no commercial bank borrow at a rate above the Bank Rate on the
overnight market? 

(b) Why would no commercial bank lend at a rate below 3.75 percent on the overnight
market?

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