COVID-19 Pandemic
The coronavirus pandemic is a grave global health threat, significantly disrupting everyday life and the economy in Canada as well as everywhere else across the world. While all Canadian economic sectors have been adversely impacted, a few like the travel, hospitality, service, and energy industry have been especially hit hard. Necessary public health measures are taken for containing virus spread, including the closedown of educational institutions, social distancing, and lockdowns, and emergency states, themselves greatly and adversely affect economic activity. But a key point to note is that though the effect is huge, it will, nevertheless, pass soon. Experts worldwide have adopted major valiant steps to combat the virus and its spread and support individuals as well as organizations through this very tough time (CBC News, 2020).
Impact of COVID-19 on Interest Rates
The average Canadian interest rate between 1990 and 2020 was 5.86% - it attained an unprecedented high in February 1991 (16%) and its lowest figure in April 2009 (0.25%). COVID-19 has coerced organizations into shutting down and employees into remaining indoors, only leaving the safety of their homes when they have no other alternative. However, to do so, in a huge public health endeavor to decelerate the disease's spread, resulting in instant, sharp consumer spending and business activity decline. Preliminary Statistics Canada figures reveal trends in interest rates for the last two decades, with the present decline of 0.25% (Bank of Canada, 2020).
The Bank of Canada retained...
Policymakers observed the pandemic adversely impacting employment and
productivity, though financial actions and lowered interest rates have together been facilitating economic recovery. Bank Committee term repo operational frequency has been decreased to once weekly, and its banker acceptance purchase program to biweekly; it claims it will adjust the programs should the market situation necessitate it. On the other hand, other provincial, federal, and business debt purchase initiatives have...…the nation's economy. With business borrowing spreads continuing to be quite high in comparison to the previous year, the central bank's
governor may, soon, decide upon expanding its organizational bond purchase scheme or declare financing for its lending scheme. Canada's
currency (CADUSD=X) rallied moments following the announcement by the Bank of Canada, though it was already strong earlier. Recent trading reveals the Canadian currency is significantly stronger as compared to the American dollar. However, this strong performance is probably more because of a greater risk-taking appetite in international investors than because of any Canada-specific factors (Bains, 2020).
Conclusion
Key, targeted financial actions and decreased interest rates combined have been cushioning the nation against the negative effects of the nationwide lockdown on people's disposable income as well as paving the way for the recovery of the nation's economy. Though it is not possible to gauge the outlook concerning this year's latter half and beyond, the Bank believes the economy will commence growing again in the 3rd quarter.…
