BoC Governor Stephen Poloz warned in a speech yesterday that the economy’s “resilience” could be “seriously tested by COVID-19”, depending on the “severity and duration of its effects”. Global economy will, “at the very least, be significantly disrupted” by the coronavirus in H1. Consumer and business confidence “could be set back for a longer period of time”, causing growth to “slow more persistently”.
He added that monetary policy can contribute in the current situation by “buffering their effects on consumer and business confidence, thereby helping the economy bridge the situation.” And, “this contribution can be especially powerful when the shock is global and the response is coordinated.” BoC lowered interest rate by -50bps on Wednesday, following the same move by Fed on Tuesday.
Poloz also reiterated that “Governing Council stands ready to adjust monetary policy further if required”. And, “we continue to closely monitor economic and financial conditions, in close coordination with other G7 central banks and fiscal authorities.”