The Bank of Canada has announced another 50bps reduction in interest rates today in an emergency meeting. The BoC rate has dropped to 0.75%. They said they are prepared to cut rates further. We will be monitoring closely if financial institutions pass on the full discount to their Prime rate over the next few days.
The Bank of Canada went on to say "It is clear that the spread of the coronavirus is having serious consequences for Canadian families, and for Canada’s economy. In addition, lower prices for oil, even since our last scheduled rate decision on March 4, will 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." Further to this, in a coordinated press release the Ministry of Finance and OSFI announced a number of stimulus packages.
OSFI announced another $300B in lending capacity
$10B available to businesses through BDC and EDC
Stimulus package to be announced by Ministry of Finance next week
OSFI also announced that they have suspended their review of the mortgage stress test.
The situation is evolving and fluid, and as such we will continue to keep you up to date on the developments. https://www.bankofcanada.ca/2020/03/bank-of-canada-lowers-overnight-rate-target-to-%c2%be-percent/