Canada's Central Bank Follows Fed Model With rate Cut - News-Credit-Mortgage-Coin

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Thursday, March 12, 2020

Canada's Central Bank Follows Fed Model With rate Cut

After the key rate cut in the United States in the wake of the virus crisis, Canada's central bank follows suit.
It lowered the key monetary policy rate on Wednesday by half a point to 1.25 percent. The currency keepers called the coronavirus outbreak a "significant negative shock" in view of the economic outlook. This would probably lead to a further deterioration in the business climate and consumer sentiment, which would worsen the economic outlook. At the same time, the central bank signaled its readiness to further lower interest rates if necessary to support the economy.


The US Federal Reserve surprisingly cut its key interest rate by half a point to 1.0 to 1.25 percent on Tuesday. The move was justified by the risks to the US economy associated with virus spread.
At a conference call, the finance ministers and central bank heads of the seven leading industrialized countries (G7) had previously agreed on their course of action against the crisis without deciding on anything specific. According to Japan's finance minister Taro Aso, monetary policy reactions or higher spending by the states are possible. Ultimately, the answer from the seven countries - Germany, France, Italy, Great Britain, Japan, the United States and Canada - may vary from country to country.


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