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Business & Finance

Bank of Canada reiterates that it could cut rates further

  • In speech to a business audience the day after the central bank held its key rate at a record low 0.25%.
  • Should things take a more persistent turn for the worse, we have a range of options at our disposal to provide additional monetary stimulus.
Published December 11, 2020

OTTAWA: The Bank of Canada could lower interest rates further without going negative if a second COVID-19 wave worsens, though it could also ease up current stimulus if a vaccine rollout brightens the outlook, a senior official said on Thursday.

In speech to a business audience the day after the central bank held its key rate at a record low 0.25%, Deputy Governor Paul Beaudry said Canada's overall level of economic activity remained in line with expectations, despite rising COVID-19 cases and tighter restrictions.

"Should things take a more persistent turn for the worse, we have a range of options at our disposal to provide additional monetary stimulus," he said, citing options like expanding its quantitative easing program and using yield-curve targeting.

"It could also include reassessing the effective lower bound, which would allow for the possibility of a lower - but still positive - policy rate," he said. He reiterated that the Bank was not considering negative rates.

Beaudry's comments mark the second time in two weeks that the bank, which for months said its key rate was at the effective lower bound, has suggested it could ease further.

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