Although Canada had previously resisted the trend to lower interest rates in light of a slowing world economy, Covid-19 seems to have changed that.
With an OECD warning this week, the U.S. Federal Bank and Australian reserve banks announced rate cuts yesterday.
Bank of Canada Governor Stephen Poloz did not make the surprise cut announcement in person, but in a statement
(Peter Nicholls-Reuters)
Analysts had been anticipating an unscheduled rate announcement and cut by Canada’s central bank this week, perhaps by 25 basis points.
Today, Bank Governor Stephen Poloz surprised most with a 50 point cut. The new rate drops from 1.75 per cent to 1.25 per cent
In an announcement, the Bank said the Canadian economy was already slow late last year, but the consequences of the spreading virus have changed their position.
Adding to the problems for the Canadian economy listed by the bank are the rail blockades, the teachers strike in Ontario, and severe winter storms in some regions.
There is speculation that rates may drop further as the effects of the virus on slowed production, and demand are felt in the coming months.
The next regularly scheduled announcement by the bank is set for April 15.
Additional information-sources
For reasons beyond our control, and for an undetermined period of time, our comment section is now closed. However, our social networks remain open to your contributions.