While the Coronavirus is a key source of economic damage, the illegal blockades have also contributed to Canada’s economic decline.
The benchmark interest rate has been cut by the Bank of Canada.
The rate was cut from 1.75% to 1.25%.
Rate changes are usually made in smaller amounts, with 25 basis point reductions or increases. The 50 basis point cut is a sign of the growing concern worldwide as the Coronavirus exacts an economic toll.
The bank has also made clear they could implement further cuts if the economic picture worsens:
“Governing council stands ready to adjust monetary policy further if required to support economic growth and keep inflation on target.”
Canada’s economy was already weakening before the Coronavirus, and was also hit by illegal blockades that will cause cascading damage for many months. Additionally, the weakness of the Trudeau government in handling the blockades, combined with the cancellation of the Teck Frontier Mine project, has sent a clear signal to investors that Canada isn’t a place that welcomes growth.
Amid such a negative economic environment, there’s only so much difference a rate cut can make.