BoC: Ample room for the asset purchases to grow even larger – CIBC

The Bank of Canada (BoC) on Friday lowered by 50bps the key interest rate to 0.50%. Analysts at CIBC, point the Canandian economy looks set to sharply  |  27/03/2020 18:03

The Bank of Canada (BoC) on Friday lowered by 50bps the key interest rate to 0.50%. Analysts at CIBC, point the Canandian economy looks set to sharply contract in the first half of 2020 and BoC actions will help alleviate some of the pain and will support the recovery, whenever that begins.

Key Quotes: 

“The Bank of Canada joined the string of central banks throwing the kitchen sink at the economic downturn. In a move we've been expecting, the Bank of Canada cut rates another 50bps, bringing the target for the overnight rate down to 0.25%. In the accompanying statement, the Bank noted that this was the effective lower bound, so further rate reductions to 0% or into negative territory seem ruled out.”

“There is ample room for the asset purchases to grow even larger or become more focused on a particular part of the yield curve to depress rates. The asset purchases  should engender a hunt for yield that could support longer-end private assets, but at some point credit easing could also become more targeted if that spillover doesn’t transpire."

“In the words of Governor Poloz, ‘A firefighter has never been criticized for using too much water.’ It’s clear then that Governor Poloz is signaling a willingness to be aggressive in battling the shock, a sharp change from a central bank that had previously been hesitant to stoke the fires of household debt accumulation with potentially unnecessary rate cuts."

“The economy looks set to sharply contract in the first half of 2020. Indeed, skyrocketing applications for employment insurance have been a sneak peek into the kind of pain currently being felt.”

Share

Popular News

Show More Popular News

Market Insight's Views

Market Insight analyses will provide both fundamental and technical comprehensions on finance
and other asset classes for Market Insight viewers

Back

Login to Market Insight Account

Your Market Insight account gives you access to the tools that we offer our customers including our
Technical Studies & Sentiment for your accounts.

Forgot Password?

Don't you have a Market Insight account? With a few easy steps you can easily register to Market Insight

Create a Market Insight's Account

Your Market Insight account gives you access to the tools that we offer our customers including our Technical Studies & Sentiment for your accounts.

register_ty

Thank you!

Welcome to Market Insight family!

You have succesfully completed the registration.
We will send you an e-mail to give you some
instructions and our Terms and Conditions!
Our account representatives will be contacting you as
soon as possible. If you have any further questions
please do not hesitate to mail us via info@marketinsight.com