""Seemingly, every day this week has brought new challenges and negative headlines related to COVID-19," he said. Yields on Canadian government two-year bonds dropped 12 basis points to 0.86%, from 0.98% Tuesday.The virus has driven economic activity down sharply in some regions, disrupted supply chains, pulled down commodity prices and prompted a repricing of risk that has tightened financial conditions, policy makers said, warning the situation could worsen.“It is likely that as the virus spreads, business and consumer confidence will deteriorate, further depressing activity,” they said.Several domestic factors are also weighing on first-quarter growth, including rail blockades, winter storms, weaker than expected business investment and a teachers strike in Ontario, the bank said.The move is part of an anticipated wave of easing from central banks around the world, and follows the Fed’s emergency decision on Tuesday to cut its benchmark rate by half a percentage point.The shift was expected. In trading Tuesday, markets assigned better than even odds Poloz would match the half-point of the Fed. For Canada’s housing market, it sure as sheep didn’t need this stimulus. “They are clearly concerned about downside risks. Due to the bank’s consistent position that rates will stay at .25%, Finder’s panel of 16 economists also agrees the rate will hold on July 15. Canada … "The bank's rate impacts the rates that Canadian savers and borrowers get for things like savings accounts and mortgages.James Laird, president of mortgage brokerage Canwise Financial and co-founder of Ratehub.ca, says anyone with a variable rate mortage can expect to feel the impact of the two 50-point rate cuts soon, if they haven't already. The shift was expected. Still, with some of the highest household debt levels among developed countries, it risks adding to financial system vulnerabilities as consumption and housing accelerates.Wednesday’s statement provided no mention of the increased financial risks to debt associated with the bout of monetary easing. The bank slashed Canada’s No. 1 interest rate today by 50 basis points, and it’s probably not the last cut. "At this point, we're penciling in another 50-basis-point cut … which will take them down to 0.25, which is as low as we got during the financial crisis. "This unscheduled rate decision is a proactive measure taken in light of the negative shocks to Canada's economy arising from the COVID-19 pandemic and the recent sharp drop in oil prices," the bank said.Under normal circumstances, the bank meets every six weeks to set its interest rate, and only takes action outside of those time frames when the situation calls for it.Friday's decision shows just how seriously Canadian policy-makers are taking the coronavirus situation. Here's what you need to knowFinance Minister Morneau announces $10 billion in credit being made available for businesses through Business Development Bank of Canada and Export Development Bank, while the Bank of Canada Gov.
It cuts when it wants to encourage people to borrow, spend and invest.TD Bank economist Brian DePratto called the move "a solid step in the right direction. The Bank of Canada has raised its benchmark interest rate by a quarter point for the fifth time since last summer, pushing up the cost of borrowing for Canadians.
“It solidified the pre-existing case to give a weak economy a shot in the arm.” Holt shifted his call to 1.25% on Tuesday.Policy makers had already shifted to a dovish stance in January due to deteriorating economic data, and the rapidly accumulating risks over the past week finally tilted them into action.The easier monetary policy should boost the disposable incomes of millions with variable rate mortgages.