The Bank of Canada cut interest rates by 50 basis points on Friday. According to National Bank of Canada analysts given the rapidly evolving nature of the coronavirus spreading, this will not be the last policymakers will say in the coming days.

Key Quotes:

“While an imminent interest rate cut was largely expected, many thought it would come after the Federal Reserve’s meeting next Wednesday so the timing of this stimulus is somewhat surprising. Moreover, this adjustment marks 100 basis points of easing provided by the Bank of Canada in less than 10 days—a record for the central bank—though these actions are clearly justified during this unprecedented COVID-19 pandemic. Given the rapidly evolving nature of this virus, this will not be the last we hear from policymakers in the coming days.”

“We will see a substantial fiscal stimulus package from the federal government next week as confirmed by Finance Minister Morneau.”

“These actions (in Canada and increasingly across the globe) show a growing sense of urgency while virus-related disruptions/shutdowns will lead to an exceptional, perhaps unprecedented Q2 contraction. It is hoped that proactive policy measures will put in place conditions for a return to growth later in 2020.”