{"id":167546,"date":"2020-03-27T11:00:02","date_gmt":"2020-03-27T15:00:02","guid":{"rendered":"https:\/\/www.countingpips.com\/?p=167546"},"modified":"2020-03-27T10:40:50","modified_gmt":"2020-03-27T14:40:50","slug":"canada-cuts-rate-3rd-time-in-march-and-to-buy-bonds","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/forex\/2020\/03\/canada-cuts-rate-3rd-time-in-march-and-to-buy-bonds\/","title":{"rendered":"Canada cuts rate 3rd time in March and to buy bonds"},"content":{"rendered":"
March 27, 2020<\/div>
\r\n<\/div><\/div>

By CentralBankNews.info<\/u><\/a><\/p>\n

Canada’s central bank cut its benchmark interest rate for the third time in March, launched a program to purchase commercial paper to ease strains in short-term funding markets and will also begin buying government bonds in the secondary market.<\/p>\n

The Bank of Canada (BOC) cut its target for the overnight rate by another 50 basis points to 0.25 percent and has now cut it by 150 basis points following a first cut on March 4 and then a second cut on March 13.<\/p>\n

“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-10 pandemic,” BOC said.<\/p>\n

Central banks worldwide have slashed their policy rates 98 times since the outbreak of the coronavirus began to impact financial markets in mid-January, many at emergency policy meetings.<\/p>\n

But BOC is the first central bank to cut its rate three times in less than a month.<\/p>

\r\n
\r\n

Free Reports:<\/p><\/div>\r\n

\r\n

<\/a>\r\n\t Get Our Free Metatrader 4 Indicators<\/u><\/b><\/a> - Put Our Free MetaTrader 4 Custom Indicators on your charts when you join our Weekly Newsletter<\/p>

\r\n
\r\n
\r\n

<\/a>\r\n\t Get our Weekly Commitment of Traders Reports<\/u><\/b><\/a> - See where the biggest traders (Hedge Funds and Commercial Hedgers) are positioned in the futures markets on a weekly basis.<\/p>

\r\n<\/div>\r\n

\r\n
<\/div>\n

The latest cut follows another emergency policy meeting by BOC as central banks worldwide have now cut rates at 52 extraordinary meetings since March 3 when the U.S. Federal Reserve kicked off this month’s rapid pace of monetary easing worldwide.
\n<\/a><\/p>\n

The Bank of Canada issued the following press release:<\/p>\n

“The Bank of Canada today lowered its target for the overnight rate by 50 basis points to \u00bc percent. The Bank Rate is correspondingly \u00bd percent and the deposit rate is \u00bc percent. 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.<\/div>\n
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 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.<\/div>\n
The Bank is playing an important complementary role in this effort. Its interest rate setting cushions the impact of the shocks by easing the cost of borrowing. Its efforts to maintain the functioning of the financial system are helping keep credit available to people and companies. The intent of our decision today is to support the financial system in its central role of providing credit in the economy, and to lay the foundation for the economy\u2019s return to normalcy.<\/div>\n
The Bank\u2019s efforts have been primarily focused on ensuring the availability of credit by providing liquidity to help markets continue to function.\u00a0 To promote credit availability, the Bank has expanded its various term repo facilities. To preserve market function, the Bank is conducting Government of Canada bond buybacks and switches, purchases of Canada Mortgage Bonds and banker\u2019s acceptances, and purchases of provincial money market instruments. All these additional measures have been detailed on the Bank\u2019s website and will be extended or augmented as needed.<\/div>\n
Today, the Bank is launching two new programs.<\/div>\n
First, the Commercial Paper Purchase Program (CPPP) will help to alleviate strains in short-term funding markets and thereby preserve a key source of funding for businesses. Details of the program will be available on the Bank\u2019s web site.<\/div>\n
Second, to address strains in the Government of Canada debt market and to enhance the effectiveness of all other actions taken so far, the Bank will begin acquiring Government of Canada securities in the secondary market. Purchases will begin with a minimum of $5 billion per week, across the yield curve. The program will be adjusted as conditions warrant, but will continue until the economic recovery is well underway. The Bank\u2019s balance sheet will expand as a result of these purchases.<\/div>\n
The Bank is closely monitoring economic and financial conditions, in coordination with other G7 central banks and fiscal authorities, and will update its outlook in mid-April. As the situation evolves, Governing Council stands ready to take further action as required to support the Canadian economy and financial system and to keep inflation on target.”<\/div>\n
\u00a0 \u00a0<\/span> www.CentralBankNews.info<\/a><\/span><\/div>\n
<\/div>\n

 <\/p>\n","protected":false},"excerpt":{"rendered":"

By CentralBankNews.info Canada’s central bank cut its benchmark interest rate for the third time in March, launched a program to purchase commercial paper to ease strains in short-term funding markets and will also begin buying government bonds in the secondary market. The Bank of Canada (BOC) cut its target for the overnight rate by another […]<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-167546","post","type-post","status-publish","format-standard","hentry","no-post-thumbnail"],"_links":{"self":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/167546","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/comments?post=167546"}],"version-history":[{"count":2,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/167546\/revisions"}],"predecessor-version":[{"id":167551,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/167546\/revisions\/167551"}],"wp:attachment":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/media?parent=167546"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/categories?post=167546"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/tags?post=167546"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}