OTTAWA (Reuters) - The Bank of Canada is keeping a close watch on turbulent financial markets in case it needs to take action again, it said on Monday, in the wake of the U.S. Federal Reserve’s emergency measures on Sunday.
“The Bank of Canada continues to monitor financial market developments closely,” Jeremy Harrison, senior media relations officer at the central bank, told Reuters in an email.
The Bank of Canada had joined the Fed and other central banks last week and in December in coordinated action to boost liquidity in shaky credit markets.
As part of the latest wave of coordinated action, the Bank of Canada will lend a total of C$4 billion to market players in two 28-day purchase and resale agreements. The first operation will take place Thursday and the second on April 3.
The bank’s next interest rate decision is on April 22.
The turmoil in world financial markets worsened on Monday after the U.S. Federal Reserve expanded its lending to securities firms on Sunday for the first time since the Great Depression and JPMorgan Chase & Co agreed to take over its beleaguered rival Bear Stearns.
In a speech last week, Bank of Canada Governor Mark Carney said Canadian money markets were not under the same pressure as those in the United States and elsewhere.
He said the bank’s intervention had helped bring the overnight interest rate close to the bank’s target of 3.5 percent. But liquidity in term money markets is higher than historical norms, despite improvements since December, Carney said.
Reporting by Louise Egan; Editing by Bernadette Baum