The Bank of Canada today lowered its target for the overnight rate by 50 basis points to ¾ per cent. This is effective Monday, March 16, 2020. The bank rate is correspondingly one per cent, and the deposit rate is ½ per cent. This unscheduled rate decision is a proactive measure, in light of the negative economic shocks to Canada’s economy arising from COVID-19 and the recent sharp drop in oil prices.
It is clear the spread of the coronavirus is having serious consequences for Canadian families, and for Canada’s economy. Lower prices for oil will also weigh heavily on the economy, particularly in energy intensive regions.
The bank will provide a full update of its outlook for the Canadian and global economies on April 15. As the situation evolves, Governing Council stands ready to adjust monetary policy further if required to support economic growth and keep inflation on target.
The bank has also taken steps to ensure that the Canadian financial system has sufficient liquidity. It announced these additional measures in separate notices on their website. The bank is closely monitoring economic and financial conditions, in coordination with other G7 central banks and fiscal authorities.
The next scheduled date for announcing the overnight rate target is April 15, 2020. The next full update of the bank’s outlook for the economy and inflation, including risks to the projection, will be published in the MPR at the same time.
Have questions about what this means for you and your mortgage? Please don’t hesitate to contact me anytime.