The Bank of Canada is widely expected to follow the U.S. Federal Reserve and cut interest rates Wednesday as the global impact of the coronavirus takes hold.
All odds point to Governor Stephen Poloz lowering interest rates by at least 25 basis points on Wednesday after global coronavirus fears spooked financial markets around the world and sent oil prices tumbling.
Canada’s central bank has managed to hold rates steady for almost 16 months, resisting a global easing trend. However, after the Fed made an emergency half-percentage point interest rate cut Tuesday morning, the Bank of Canada may now have to follow suit.
Only a month ago, it looked like Canada’s central bank would be able to keep its benchmark rate unchanged at 1.75% for the last few meetings before his term ends in June. Markets are now pricing in 75 basis points of cuts by the time Poloz steps down later this year.
With the Bank of Canada already holding the highest policy rate among advanced economies, it’s unlikely that it can resist the worldwide policy response to the fallout from the coronavirus and China’s mounting slowdown.
