Bank of Canada interest rate decision highlights:
- The overnight rate was lowered to 1.25%
- Prior was 1.75%
- Stands ready to adjust monetary policy further if required
- Outlook is clearly weaker now than it was in January
- Coronavirus is a material negative shock to Canadian and global outlook
- Business activity in some regions has fallen sharply and supply chains have been disrupted
- It is likely that as the virus spreads, business and consumer confidence will deteriorate, further depressing activity.
- It is becoming clear that the first quarter of 2020 will be weaker than the Bank had expected
- Rail line blockades, strikes by Ontario teachers, and winter storms in some regions are dampening economic activity in the first quarter
- Full text
The Canadian dollar fell on the headlines with USD/CAD rising to 1.3400 from 1.3335. I warned repeatedly ahead of the decision that the BOC doesn't like to have higher rates than the Federal Reserve.
