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The Bank of Canada has lowered its overnight interest rate to 0.25%.
It represents a cut of 50 basis points.
The central bank said its unscheduled decision was “intended to provide support to the Canadian financial system and the economy during the COVID-19 pandemic.”
COVID-19 is having “serious consequences” for both Canadians and the economy, the bank added, and is overlapping with an “abrupt decline” in global oil prices.
“The pandemic-driven contraction has prompted decisive fiscal policy action in Canada to support individuals and businesses and to minimize any permanent damage to the structure of the economy,” the bank explained.
It hopes that its decision will help make more loans available and “lay the foundation for the economy’s return to normalcy.”
The bank is also launching two new programs:
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The Commercial Paper Purchase Program (CPPP), which it said will help to alleviate strains in short-term funding markets and preserve a key source of funding for businesses
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The acquisition of federal securities in the secondary market, beginning with a minimum of $5 billion per week, across the yield curve
It will next announce its overnight rate target on April 15.
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