The BOC lowered it’s target for the overnight rate by half point which will result in reduced variable rates on mortgages and lines of credits.
The Coronavirus has caused such a negative effect on economies worldwide and business/consumer fears will continue to place downward pressure on the Canadian and global economy.
The Banks announcement states:
“Before the outbreak, the global economy was showing signs of stabilizing. However, COVID-19 represents a significant health threat to people in a growing number of countries”
“It is becoming clear that the first quarter of 2020 will be weaker than the Bank had expected.”
“As the situation evolves, Governing Council stands ready to adjust monetary policy further if required to support economic growth and keep inflation on target. While markets continue to function well, the Bank will continue to ensure that the Canadian financial system has sufficient liquidity.”
That last quote is the most interesting as it hints that the Bank of Canada is prepared to reduce rates further if necessary.
Read the full announcement here: https://www.bankofcanada.ca/2020/03/fad-press-release-2020-03-04/