imageEconomyMar 13, 2020 02:41PM ET

(C) Reuters. Bank of Canada Slashes Benchmark Interest Rate in Surprise Move

(Bloomberg) — The Bank of Canada cut interest rates by half a percentage point in an emergency move to buffer the nation’s economy from the double hit from the coronavirus and tanking oil prices

The Ottawa-based central bank lowered it’s policy rate to 0.75% and said it “stands ready” to move again if needed. Governor Stephen Poloz, in a joint press conference with Finance Minister Bill Morneau, announced a new facility to support funding markets for small- and medium-size businesses “at a time when they may have increased funding needs and credit conditions are tightening.”

“It is clear that the spread of the coronavirus is having serious consequences for Canadian families, and for Canada’s economy,” the Bank of Canada said in a statement. “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.”

This marks the first emergency rate cut by the country’s central bank since the last global recession and it’s part of a global response in order to prevent the world economy from going into a recession. The growing number of coronavirus cases globally, the shock to oil prices and volatility in financial markets have prompted fears that Canada will undergo an economic contraction in the second and third quarters of 2020.

The emergency rate cut was not entirely unexpected following the Bank of Canada’s March meeting, where it lowered interest rates by half a percentage point for the first time in more than four years. Still, the response represents a dramatic move in an effort to keep the economy running amid rapidly deteriorating financial conditions.

“The Bank of Canada is taking concerted action to support the Canadian economy during this period of economic stress,” Poloz said in a statement. “The Bank’s Governing Council stands ready to do what is required to support economic growth and keep inflation on target, and we will continue to ensure that the Canadian financial system has sufficient liquidity.”

Bank of Canada Slashes Benchmark Interest Rate in Surprise Move

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.