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Ottawa, Mar 13 (Canada): Due to negative shocks to Canada's economy arising from the COVID-19 pandemic and the recent sharp drop in oil prices, the Bank of Canada, the nation's central bank, resorted to an emergency rate cut by cutting the central bank's benchmark interest rate by 50 basis points to 0.75 per cent, media reports said.
Bank of Canada. Image credit: Wikipedia
The rates of the central bank had already been cut to 1.25 percent at at the last scheduled meeting on March 4 to help counteract the impact of the coronavirus.
Normally, the interest rate of the bank is set every six weeks, except when the situation calls for it. The last time it was during the financial crisis in 2009.
Doug Porter, chief economist with the Bank of Montreal remarked that he has never seen a rate announcement at two o'clock on a Friday afternoon.
The rates that Canadian savers and borrowers get their savings accounts and mortgages are impacted by the bank's rate.
The Royal Bank of Canada said Friday it expects Canada to go into a recession later this year.
Steps have been taken by the Bank to ensure sufficient liquidity of the Canadian financial system.
Canada's economic and financial conditions are also being closely monitored by the bank, in coordination with other G7 central banks and fiscal authorities.
The next scheduled rate decision by the bank will be made on April 15, when the Central Bank will provide full update of its outlook for the Canadian and global economies including risks to the projection, which would then be published in the Monetary Policy Report (MPR) at the same time.