OTTAWA — The Bank of Canada will announce this morning its trend-setting interest rate amid economic concerns stemming from the novel coronavirus outbreak.
In January, governor Stephen Poloz opened the door to a possible interest rate cut if weakness in the economy was more persistent than expected.
But that was before COVID-19, as the virus is named, spread to more countries outside of China, disrupting global supply chains and shaving forecasts for economic growth in Canada and elsewhere.
Economists are widely forecasting the bank will cut its rate today following an unexpected 0.5 percentage point cut by the U.S. Federal Reserve on Tuesday to its rate as an emergency economic measure.
The central bank is expected to cut its rate by one-quarter of a point and leave open the possibility of mirroring the American cut of half a percentage point.
Markets had already baked in at least one rate cut this year, but now forecasts peg today’s decision as the first of what could be multiple reductions to the central bank’s key interest rate target, which stands at 1.75 per cent.
This report by The Canadian Press was first published March 4, 2020.