OTTAWA (Reuters) - Canada’s central bank said on Tuesday it mulled waiting until its scheduled meeting to ease its overnight interest rate but concluded there could be “considerable benefit” to reducing rates immediately amid economic uncertainty caused by the coronavirus outbreak.
The Bank of Canada cut its benchmark rate to 0.75% from 1.25% in an emergency move on Friday. The central bank’s interest rate decision had not been expected until mid-April, and it was the first unscheduled cut since the financial crisis of 2008.
In an unusually detailed summary of its deliberations released on Tuesday, the central bank said the coronavirus outbreak will “clearly have a major negative impact on the economy” and reiterated it is ready to adjust further and deploy other market tools, if required, to support economic growth and keep inflation on target.
“After some discussion of the relative merits, Governing Council concluded that there could be considerable benefit to reducing interest rates immediately and significantly to complement the other measures supporting the functioning of credit markets,” the statement said.
Ottawa has pledged C$10 billion ($7.05 billion) in credit support for businesses and has said it will do whatever is necessary to protect Canadians. The Canadian government is also expected to unveil additional fiscal stimulus measures this week.
In an unprecedented joint news conference on Friday with Canadian Finance Minister Bill Morneau, Bank of Canada Governor Stephen Poloz told reporters he was particularly concerned by the potential damage to the economy from both the coronavirus and low prices for oil, a key Canadian export.
Reporting by Kelsey Johnson in Ottawa; Editing by Franklin Paul and Dan Grebler