BoC: Better late than never – BMO

The Bank of Canada (BoC) has brought policy rates back to 2009 crisis low as the economic hit from COVID-19 is expected to be severe, Benjamin Reitzes from BMO Economics informs.

Key quotes

“The BoC cut rates 50 bps to 0.25%, moving policy rates back to the lows seen during the financial crisis just over a decade ago.” 

“The BoC announced it is officially joining the QE club, as it will purchase at least $5 bln per week in Government of Canada bonds, that equates to about 1% of GDP per month. Furthermore, the Bank is launching a Commercial Paper Purchase Program (CPPP) to support short-term funding markets.”

“At the presser Governor Poloz addressed the option of negative rates, saying that while -0.5% is the theoretical lower bound for policy rates, it's something that's not high on their to-do list.”