Bank of Canada Enacts Another Rate Cut
First G7 Central Bank to Cut Rates Twice in 2020
Response to Economic Downturn Caused by COVID-19 Pandemic
In an effort to stimulate economic growth amidst the ongoing COVID-19 pandemic, the Bank of Canada (BOC) has announced another rate cut, following its initial reduction in early June.
The BOC became the first Group of Seven (G7) central bank to cut interest rates when it lowered its policy rate from 4.75% to 4.50% in June. This latest cut brings the rate down to 4.25%, marking the lowest level since 2015.
The decision was widely anticipated by economists and financial markets, who had been monitoring the BOC's response to the economic downturn caused by the pandemic. The BOC's Governor, Tiff Macklem, has stated that the central bank is "prepared to do whatever it takes" to support the economy and keep inflation under control.
Analysts at TD Economics expect the BOC to lower its key interest rate to 4.00% by the end of the year. This would further stimulate economic activity by reducing borrowing costs for businesses and consumers.
The BOC's decision is a sign of the global economic challenges caused by the COVID-19 pandemic. Central banks around the world are taking aggressive measures to support their economies and prevent a prolonged recession.
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