Bank of Canada cuts key interest rate to 0.25%

Dated: 03/27/2020

Views: 71

Bank of Canada cuts key interest rate to 0.25%

Canada's central bank has also launched a quantitative easing program to bring liquidity to Canadian markets

The Bank of Canada cut its key interest rate by 50 basis points on Friday March 27. This is the third 50-basis-point cut this month as the bank does what it can to ease the cost of borrowing during the ongoing COVID-19 pandemic.

The unscheduled rate decision brings the bank’s policy interest rate down to 0.25 per cent. At 0.75 per cent, it was the highest such rate among the central banks of G7 countries.

 
article continues below
 

On Friday, Canada’s central bank also announced two new programs to bring greater liquidity to Canadian markets: the Commercial Paper Purchase Program (CPPP), and a quantitative easing program.

Under the latter, the bank will purchase a minimum of $5 billion in Government of Canada securities per week, starting April 1. The program will continue until Canada’s economic recovery is “well underway.”

Over the next 12 months, the CPPP will see the bank undertake primary and secondary market purchases of commercial paper issued by Canadian firms, municipalities and provincial agencies that have an outstanding commercial paper program. Poloz said the program will “help to restore a key source of short-term funding for businesses.”

Bank of canada rate cuts
Bank of Canada rate decisions over the last five quarters | Bank of Canada website

“The intent of our decision today is two-fold: to immediately support the financial system so it keeps on providing credit, and, over the longer term, to lay the foundation for the economy’s return to normalcy,” Bank of Canada governor Stephen Poloz said in an opening statement to media.

Nearly two weeks ago, the U.S. Federal Reserve slashed its overnight rate by one percentage point to a range between zero per cent and 0.25 per cent.

Blog author image

Steven Axford

Steve Axford grew up in Victoria, BC and has always been active in his community. Steve is a Victoria Cougars Hockey Team alumni as well as a Victoria Shamrocks (intermediate) alumni. During his time....

Latest Blog Posts

Victoria real estate market continues to adapt in the changing times

 A total of 979 properties sold in the Victoria Real Estate Board region this July, 38.7 per cent more than the 706 properties sold in July 2019 and 21.2 per cent more than the previous month

Read More

No clear end to pandemic-related uncertainty in B.C. housing market

VANCOUVER — A new forecast says the housing market in British Columbia remains uncertain during the COVID-19 pandemic.Central 1 says it expects home sales to recover marginally in 2020 and

Read More

Victoria real estate market impacted by many different factors in June

A total of 808 properties sold in the Victoria Real Estate Board region this June, 9.2 per cent more than the 740 properties sold in June 2019 and 76.8 per cent more than the previous month of May

Read More

Why housing is still the best investment for most Canadians

Owning a home remains the largest single investment for most Canadians. So it’s not surprising that fear over an economy turned upside down literally hits home for so many. The Canada

Read More