Expectations for Canadian short-term interest rates are best captured in the overnight index swap market, or OIS. Participants in the OIS market can use the swaps to hedge exposure to future Bank of Canada policy rate changes, or to speculate on them. We watch this market closely because it provides the average forecast of market participants for the path of our policy rate.
In a similar manner, the Term Securities Lending Facility (TSLF) and Primary Dealer Credit Facility (PDCF) provide liquidity to primary dealers to allow them to perform their function of making markets to support their customers' needs to buy, sell, and issue securities. 4 The immediate goal of these facilities was the reduction of stresses in repo markets for securities other than Treasury securities.