Bank of Canada Lowers Interest Rate to Relief Coronavirus Impact. Coronavirus (COVID-19) epidemic has forced business to close temporarily and people isolating at home in order to decrease the rate the virus is spreading. The outbreak was unexpectedly severe causing a recession. The Federal Government has made initiatives to aid the economy through tax reduction, subsidy and injection to the stock market.
The Bank’s benchmark interest rate was reduced to 1.25% on March 4th. This week as the economy comes to a further stall when major retailer stopping business, public events being cancelled, and the government suggests avoiding public gathering. The Bank of Canada made an unprecedented move to cutting the benchmark interest rate by another 0.50% to 0.75% outside of their typical adjustment interval.
The decision shows that the Bank of Canada and the Government is taking the Coronavirus epidemic very seriously. The situation will continue to get worse until a vaccine is developed, or the virus is curtained to a certain degree. There is a high possibility that the interest rate will be reduced by another 0.50% point as it is required in a time of global crisis where there is no production and consumption. Mortgages and loans on people at critical time is unbearable.