DEFINITION of 'Monetary Conditions Index - MCI'

A measure of monetary conditions in the Canadian economy, giving an idea of the relative ease or tightness of monetary policy. MCI gauges the effect that Canada's monetary policy has on the Canadian economy through changes in the exchange rate and interest rates.

BREAKING DOWN 'Monetary Conditions Index - MCI'

The index looks at interest rates in Canada and the exchange rate Canada has relative to its major trading partners to give an idea of how these factors are working together to influence the economy. It is calculated as the change in the 90-day commercial paper rate since 1987 plus one third of the percentage change in the exchange rate of the Canadian dollar against the currencies of six of Canada's major trading partners (U.S., EU, Japan, U.K., Switzerland and Sweden), each with a different weighting.

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