OTTAWA: The Bank of Canada, taking its cue from other central banks, slashed a key interest rate by the most in more than a decade on Wednesday to help tackle a coronavirus outbreak and said it would cut again if necessary.
The bank lowered its benchmark overnight rate to 1.25 per cent from 1.75 per cent, prompting money markets to price in a better than even chance of another reduction next month.
Since last Friday, the world’s top bankers have reassured markets they would try to head off the impact of the coronavirus. The US Federal Reserve and the Reserve Bank of Australia both cut rates on Tuesday.
The Bank of Canada said the outbreak was “a material negative shock” to the Canadian and global outlooks and predicted that as it spread, business and consumer confidence would deteriorate, further depressing economic activity.
“As the situation evolves, (the Bank’s) 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 continues to closely monitor economic and financial conditions, in coordination with other G7 central banks and fiscal authorities.”
— Reuters
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