The Bank of Canada doesn’t always follow the U.S. Federal Reserve, but it did this week.
Canada’s central bank slashed its policy rate by a half-point on March 4, matching the Fed’s surprise announcement 24 hours earlier.
The twin announcements — along with various others in recent days — raised COVID-19 contagion to the status of economic crisis. The last time the U.S. made an unscheduled interest-rate announcement was during the Great Recession. The Bank of Canada stuck to its calendar, but went for shock value by going bigger than a typical quarter-point change. It hadn’t done anything like that since 2009, when it was on its way to dropping interest rates to effectively zero.
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