Bank of Canada Cuts & Ends QT, Loonie Plunges Further
Canada’s central bank slashed its key interest rate, as widely expected—but went even further. Earlier today, the Bank of Canada (BoC) announced it would slash the overnight rate by 25 basis points (bps), as well as end its quantitative tightening (QT) program pre-maturely. The central bank has been amongst the fastest easing in the world, and the stimulus is sending a clear warning sign—Canada won’t be able to keep up with global growth. That’s before the added risks of tariffs enter the picture.
Canadian Economy To Significantly Fall Behind Global Growth
Canada’s weak economy is among the biggest issues contributing to monetary easing. Rising unemployment and “excess supply” are often debated points, but being left significantly behind global growth is a much bigger one. The BoC currently sees global GDP rising 3% on average per year, for the next two years. Meanwhile, in Canada, expectations have been cut down to an average of 1.8% over the same period. That cuts roughly a fifth of the central bank’s forecast made just a few months prior. …[Continue Reading]