Bank of Canada (The Canadian Press)

Bank of Canada (The Canadian Press)

Bank of Canada cuts key interest rate target to 0.25%

Bank governor Stephen Poloz said the goal of the decision Friday is to restore market functioning

The Bank of Canada cut its key interest target by half a percentage point to 0.25 per cent in an unscheduled rate announcement Friday.

The central bank said its decision to lower rates is aimed at cushioning the economic shocks from COVID-19 and a sharp drop in oil prices by easing the cost of borrowing.

It added that providing credit in the economy for businesses that need it should help lay the foundation for the economy’s return to normalcy.

The interest rate cut takes the key rate to what the central bank referred to as “its effective lower bound” or the lowest level that rates can be set.

The unexpected decision marks the second time this month the bank has made an unscheduled cut to its trend-setting interest rate and the third cut overall from the start of March when the rate was at 1.75 per cent.

Bank governor Stephen Poloz said the goal of the decision Friday is to restore market functioning and help create a bridge for businesses and consumers over the economic shutdown linked to curbing the spread of COVID-19.

He also downplayed the idea of sending interest rates into negative territory, saying they’re not sensible at this stage.

The central bank also launched two new programs.

One will aim to alleviate strains in short-term funding markets, while the other will see the central bank begin acquiring federal government securities in the secondary market with a minimum of $5 billion per week.

“Low interest rates help to cushion the shock by easing the cost of borrowing,” Poloz said. “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.”

Poloz said it was too soon to say whether Canada was in a recession.

Latest numbers show 39 people across Canada have died as a result of the highly contagious COVID-19 virus, 15 of them in Ontario, which has seen the most fatalities. Quebec, with eight deaths, has reported the most cases in Canada at 1,629 — around double that in Ontario and B.C., which has seen 14 deaths.

Only Nunavut has not confirmed any infections to date.

The flu-like COVID-19 poses a particular risk to older people and those with underlying conditions but can strike anyone. Governments and experts have urged people — in some cases backed up by the threat of fines or jail time — to keep their distance from one another. Travellers entering Canada are required to quarantine for 14 days.

The COVID crisis has been keeping police busy, sometimes in unusual ways. For example, police in Hamilton charged a teenaged McDonald’s employee with fraud, mischief and uttering a forged document for allegedly faking a doctor’s note that she had the virus. The outlet was forced to shut down for several days while it was sanitized.

In New Brunswick, police charged a man with assault for allegedly coughing in someone’s face. Kennebecasis regional police say they had responded to a call about people failing to isolate themselves after returning from abroad as is mandatory. The man was arrested for allegedly uttering threats and “purposely coughing in someone’s face while feeling ill.”

With much of the country’s normal life affected by business closures and directives to stay at home, governments have scrambled to cushion the economic fallout. The Liberal government in Ottawa has already pledged $107 billion in direct assistance and tax relief for those among the unprecedented newly jobless, with more help expected.

The Canadian Press

Like us on Facebook and follow us on Twitter.

economy

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

Interior Health has declared the Cariboo Chilcotin a community cluster. (Angie Mindus photo)
Interior Health declares Cariboo Chilcotin region a COVID-19 cluster, 215 cases since Jan. 1

Most cases are related to transmission at social events and gatherings in Williams Lake

The City of Williams Lake is awaiting the arrival of seven terrain park features typically found at ski hills to create more winter recreational opportunities in Boitanio Park. (Arena Snowparks Instagram)
City shows cool side with winter, Boitanio rail park

“We’re just waiting for their arrival and a little more snow,” Atkinson said.

Williams Lake First Nation Chief Willie Sellars provides a community COVID-19 update from his home Wednesday, Jan. 20. (Williams Lake First Nation Facebook image)
WLFN chief reports 11 members fully recovered from COVID-19

23 active cases remains, says Chief Willie Sellars

A vial of the Moderna COVID-19 vaccine is displayed on Jan. 5, in Salt Lake City, Utah. (Rick Bowmer/AP)
Power outage spoils COVID-19 vaccine at Tl’etinqox

Temperature-sensitive vaccine no longer viable after Jan. 18 event

Maj.-Gen. Dany Fortin, vice-president of logistics and operations at the Public Health Agency of Canada, speaks at a news conference on the COVID-19 pandemic in Ottawa, on Friday, Jan. 15, 2021. THE CANADIAN PRESS/Justin Tang
B.C. records 500 new COVID-19 cases Wednesday, 14 deaths

Outbreak at Surrey Pretrial jail, two more in health care

Vancouver Canucks’ Travis Hamonic grabs Montreal Canadiens’ Josh Anderson by the face during first period NHL action in Vancouver, Wednesday, Jan. 20, 2021. THE CANADIAN PRESS/Jonathan Hayward
Horvat scores winner as Canucks dump Habs 6-5 in shootout thriller

Vancouver and Montreal clash again Thursday night

Cannabis bought in British Columbia (Ashley Wadhwani/Black Press Media)
Is it time to start thinking about greener ways to package cannabis?

Packaging suppliers are still figuring eco-friendly and affordable packaging options that fit the mandates of Cannabis Regulations

A woman writes a message on a memorial mural wall by street artist James “Smokey Devil” Hardy during a memorial to remember victims of illicit drug overdose deaths on International Overdose Awareness Day, in the Downtown Eastside of Vancouver, on Monday, August 31, 2020. THE CANADIAN PRESS/Darryl Dyck
B.C. paramedics respond to record-breaking number of overdose calls in 2020

On the front lines, COVID-19 has not only led to more calls, but increased the complexity

Vernon's Noric House long-term care facility is dealing with an influenza outbreak amid the COVID-19 pandemic. (File photo)
Two more deaths at Vernon care home

Noric House case numbers remain steady, but death toll rises

Eighteen-year-old Aidan Webber died in a marine accident in 2019. He was a Canadian Junior BMX champion from Nanaimo. (Submitted)
Inadequate safety training a factor in teen BMX star’s workplace death in 2019

Aidan Webber was crushed by a barge at a fish farm near Port Hardy

Southern resident killer whales in B.C. waters. Research shows the population’s females are more negatively influenced by vessel traffic than males. (Photo supplied by Ocean Wise Conservation Association)
Female orcas less likely to feed in presence of vessel traffic: study

Research the southern resident population raises concerns over reproduction capacity

(Black Press Media files)
Transport Canada not budging on enclosed deck rules, despite calls from BC Ferries union

There have been at least 23 cases of the U.K. variant detected in Canada, four of which are in B.C.

The Elk Valley Hospital is adapting to meet the needs of patients in the Elk Valley.
1-in-5 COVID tests coming back positive in and around Fernie, sparking concern

Dr Ron Clark of Elk Valley Hospital said one in five tests was returning positive for COVID-19

Most Read