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'Whatever it takes': Bank of Canada slashes key rate again in response to COVID-19

Last Updated Mar 13, 2020 at 11:55 am PDT

Minister of Finance Bill Morneau waits to appear before the House of Commons Finance committee in Ottawa, Wednesday, February 19, 2020. Morneau was told weeks into the Liberals' second mandate that Canadians are most worried about affordability in areas where governments have a lot of power over prices — particularly child care. (THE CANADIAN PRESS/Adrian Wyld)

OTTAWA (NEWS 1130) – The Bank of Canada has cut its benchmark interest rate half a percentage point to 0.75 per cent, after a half-point cut last week to defend the economy against damage from COVID-19 and collapsed oil prices.

Bank of Canada Governor Stephen Poloz said it’s clear the novel coronavirus outbreak has already had an impact on Canadians and the economy, and that the central bank stands ready to help.

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

Meanwhile, Finance Minister Bill Morneau announced on Friday Ottawa would be making $10-billion available to businesses impacted by the outbreak through a credit facility program.

“What we’re experiencing is a health crisis. Given its breadth across the globe, it also has important economic consequences. The uncertainty surrounding the spread of COVID-19 has increased volatility in our markets, and I know that this has made many Canadians anxious.”

Morneau said Canada has the “strongest and most resilient banking system in the world,” which is what allowed the country stay afloat during the financial crisis of 2008.

He pointed out the credit facility program was an effective tool during that time, and believes it will be one this time around, too.

In addition, the finance minister said he’s been in touch with banks, labour representatives, leaders, and his international as well as domestic counterparts to discuss the economic impacts of the novel coronavirus. In an effort to stay on top of the situation, he announced he would be holding a weekly conference call with provincial and territorial ministers.

When it comes to Canada’s banks, Morneau said they have promised him that they will “support businesses and individuals through these difficult times in a responsible, fair, and compassionate way.”

Morneau promised a “significant” stimulus package would come from the federal government next week.

“We are going to do whatever it takes to protect Canadians and keep our economy strong,” he said.

The rate cut comes as private-sector economists have warned that Canada is heading into a recession later this year because of the economic shock of COVID-19 and a sharp downturn in oil prices.

Prime Minister Justin Trudeau earlier Friday that Ottawa was looking at ways to get money directly into the pockets of Canadians so they can cover their bills should their lives be upended by COVID-19.

He said help would be targeted to vulnerable Canadians, as well as help to small businesses and workers who see disruptions in their earnings.

Trudeau said the government’s focus is on ensuring that Canadians have the resources and money they need to not have to stress about rent and groceries if they can’t go to work.

The Liberals had promised to deliver a budget on March 30, but the House of Commons has now agreed not to sit until late April to prevent the spread of the novel coronavirus disease.

Canada has recorded more than 150 COVID-19 cases and one death in a pandemic that has swept much of the world.