(Reuters) - The Bank of Canada delivered a surprise interest rate cut on Friday, bringing down its benchmark rate by 50 basis points to 0.75%. The central bank cut its key rate by a similar margin last week in the face of a fast-spreading coronavirus outbreak.
“The move coming this afternoon was a surprise in terms of timing but we’d expected the next move to be a 50-basis point cut. It’s just the timing of the move rather than the magnitude or the direction which caught people by surprise today.”
“We think there’s going to be another 50 basis points worth of cuts coming, down to 0.25, but that’s really the consensus at the moment.”
“This is certainly welcome and timely given how dramatically events have deteriorated this week, both regarding the virus and in financial markets.”
“The markets were pricing in pretty dramatic rate cuts from the Bank (of Canada) as well as the Federal Reserve over the next few weeks. It’s a question of timing. I don’t think anyone is completely surprised, given what has happened this week, that the Bank would spring into action with an emergency rate cut. It’s part of a coordinated effort with the Finance Department and banking regulators to keep the economy supported during the crisis.”
“We’re a little surprised by the timing. We thought they would wait until next week to go with or right after the Fed. But it did become pretty clear over the course of this week that an inter-meeting cut was going to be required in short order.”
“We still expect them to go by another 50 basis point in April.”
Reporting by Fergal Smith, Nichola Saminather and Jeff Lewis; Editing by Denny Thomas