Canada's central bank fired another missile in the economic war against the impact of the coronavirus on Friday, lowering its benchmark interest rate by another 50 basis points to near zero.
In an unscheduled decision, the central bank lowered its target for the overnight rate to 0.25% from 0.75% as the Covid-19 outbreak and the related global oil-price plunge is having “serious consequences” on the Canadian economy.
"This unscheduled rate decision brings the policy rate to its effective lower bound and is intended to provide support to the Canadian financial system and the economy during the Covid-19 pandemic," Canada's central bank said in a statement.
"The spread of Covid-19 is having serious consequences for Canadians and for the economy, as is the abrupt decline in world oil prices," the bank said.
"The pandemic-driven contraction has prompted decisive fiscal policy action in Canada to support individuals and businesses and to minimize any permanent damage to the structure of the economy."
The bank also announced the launch of two "quantitative easing" programs designed to ensure liquidity in Canada's financial system, including purchasing a minimum of $5 billion of government of Canada securities a week in the secondary market, across the yield curve, and also buying commercial bonds to "help alleviate strains in short-term funding markets."
G-7 central banks including the Bank of England, the Bank of Japan and the Federal Reserve have all instituted dramatic reductions in interest, and promised record amounts of credit and promised to buy up bonds that no one currently wants in order to ensure the global financial system continues to operate amid the biggest economic shutdown in history.