BANK OF CANADA CUTS RATES AGAIN

By Gloria Galloway

OTTAWA (MaceNews) – The Bank of Canada has slashed its target overnight rate for the second week in a row as it attempts to prop up an economy jolted by the double punch of low oil prices and the spread of the pandemic coronavirus.

The bank is cutting its overnight rate by 50 basis points to 0.75 percent, after cutting 50 basis points last week when financial markets were feeling the first impacts of the disease.

Bank of Canada Governor Stephen Poloz announced the rate drop at a joint news conference with Bill Morneau, Canada’s finance minister, who said his government would provide $10 billion in immediate credit to Canadian businesses through Ottawa’s Business Development Bank and Export Development Canada.

Morneau also promised that an an additional stimulus package would be announced next week, before a budget that is scheduled for March 30.

Canada had previously committed $1 billion to tackle the COVID-19 virus, with the money going to research, health costs, and to people whose jobs are affected by the disease.


Canadian Prime Minister Justin Trudeau held his own news conference on Friday morning from the front porch of his home where he is in self-quarantine because his wife, Sophie, has tested positive for the coronavirus. She is said to be doing well.

Trudeau said Canada is “pulling out all the stops” to get the country through the crisis and Poloz echoed those statements.

“It is already clear that the spread of the coronavirus is having serious consequences for Canadian families, and for Canada’s economy,” he told reporters.

“In addition, lower prices for oil, even since our last scheduled rate decision on March 4, will weigh heavily on the economy, particularly in energy intensive regions.


Combined with the other measures announced today, lower interest rates will help to support confidence in businesses and households.”

Poloz also announced a new Bankers’ Acceptance Purchase Facility. It will support a key funding market for small- and medium-size businesses at a time when they may have increased funding needs and credit conditions are tightening.

The Bank of Canada’s next interest rate announcement is expected on April 15. The bank said it was prepared to take additional steps to boost the economy if needed.

 “As the situation evolves, Governing Council stands ready to adjust monetary policy further if required to support economic growth and keep inflation on target,” the bank said.

“The Bank has also taken steps to ensure that the Canadian financial system has sufficient liquidity. These additional measures have been announced in separate notices on the Bank’s website. The Bank is closely monitoring economic and financial conditions, in coordination with other G7 central banks and fiscal authorities.”

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