Bank of Canada cuts key rate to 1.25% amid coronavirus concerns

The Bank of Canada is cutting its key interest rate target by half of a percentage point, dropping it to 1.25 per cent in response to the economic shock from the coronavirus
outbreak.

In January, the central bank said the global economy was showing signs of stabilizing, but governor Stephen Poloz opened the door to a possible interest rate cut if weakness in the economy was more persistent than expected.

In a statement today, the Bank of Canada says it’s becoming clear the Canadian economy won’t grow as much as previously forecasted for the first quarter of this year.

The cut in the bank’s key rate is the first since the summer of 2015 and brings the rate to a level it hasn’t been at since early 2018.