This study estimates a single-equation reaction function to represent shifts in the economic indicators to which the Bank of Canada has responded in setting short-term interest rates during the period of flexible exchange rates since 1970. Over this period, the major indicators appear to have been, in succession, changes in the unemployment rate, the growth rate of the money supply, changes in American interest rates, and changes in the utilization of industrial capacity. Such results suggest that macroeconomic models of the Canadian economy could be subject to specification error if they assume that the Bank's response to indicators does not change over time.