The Canadian economy's resilience could be "seriously tested" by a coronavirus outbreak but the Bank of Canada's decision to cut a key interest rate this week should help soften the blow, Governor Stephen Poloz said on Thursday.
On Wednesday, the bank slashed the overnight rate by half a percentage point to 1.25 per cent and said it was prepared to cut further if needed to help tackle the effects of the coronavirus, also known as Covid-19. "We made a decision this week not to dip our toe in the water but rather make a decisive and clear move so that people get immediate impact... we believe we've done a lot there to cushion a blow," Mr Poloz told a news conference, adding that the level of international coordination was high.
Poloz reiterated the central bank's readiness to cut further in a speech, saying the outbreak - the size and scope of which remains unknown - could hit consumer and business confidence. "The Canadian economy has demonstrated good resilience in the past couple of years. That resilience could be seriously tested by Covid-19, however, depending on the severity and duration of its effects," he told a Toronto business audience.