The Bank of Canada’s fight against the next Great Recession began on March 4, when Governor Stephen Poloz and his five deputies cut the benchmark interest rate by half a percentage point.
A cut was expected. GDP had effectively stalled at the end of 2019. But the size of the reduction got people’s attention; the Bank of Canada, like many of its peers, favours incremental, quarter-point moves. “The COVID-19 virus is a material negative shock to the Canadian and global outlooks, and monetary and fiscal authorities are responding,” officials said in their revised policy statement, foreshadowing a dramatic series of events that will be discussed for years.
Canada’s monetary authority would respond again nine days later with a second half-point cut, a surprise move outside the central bank’s schedule of eight annual announcements dates. The Bank of Canada had never dropped interest so much so fast, demonstrating the gravity of the situation caused by the rapid spread of the COVID-19 virus through Europe and North America.
Continue reading at CIGIonline.org ...