Stress in Canada’s financial system amid the spread of the coronavirus pandemic has risen to levels unseen since the days prior to the September 2008 meltdown of the global financial system. Canada's system, as measured by the RSM Canada Financial Conditions Index, experienced a blow of more than four standard deviations below normal conditions during ... READ MORE >
Bank of Canada
Coronavirus impact on Canadian economy calls for more government action
There is no question COVID-19 will significantly wound the Canadian economy. The big question governments and policymakers have to grapple with is whether the downturn will be short term or longer term in nature. Indeed, the answer to this question will help to guide the appropriate fiscal policy response. While most headlines of late have focused on the ... READ MORE >
Bank of Canada lowers policy rate in response to health crisis
The Bank of Canada on Wednesday reaffirmed its commitment to the G-7 to address the threat to the economic growth posed by the outbreak of the coronavirus. Canada’s central bank moved aggressively to drop its policy rate by 50 basis points, to 1.25%, following action taken by the Federal Reserve on Tuesday. We now expect the other major central banks, ... READ MORE >
Holding interest rates steady, Bank of Canada keeps the door open for a cut
The Bank of Canada held its overnight interest rate at 1.75% on Wednesday as the central bank kept its powder dry ahead of an uncertain path of growth in the domestic economy in 2020. The tone of the policy statement would imply that the Bank of Canada stands ready to cut rates to bolster the domestic economy should growth slow. Given that the ... READ MORE >
The Bank of Canada’s dilemma — stability versus rate cut
Canadian money markets imply that the Bank of Canada will remain on hold at 1.75% at the interest rate announcement on Jan. 22. The implied probability of a rate change that day is nearly zero, according to the futures market. But we do think that the decision is a close call. While maintaining the overnight rate at 1.75% would appear to be prudent at the ... READ MORE >