(Newswire.net — September 7, 2020) — Carolyn Wilkins who is No.2 official of Bank of Canada declared that the current coronavirus pandemic showed the limitations of a monetary policy to solve all problems. The bank studies potential changes to inflation rate.
She was speaking at a workshop which was organized by the bank itself and noted that future challenges for the bank are obvious, as the world is plunged into a deep economic crisis. Interest rates are currently low and the central bank’s capacity to tackle future downturns are diminished.
Wilkins also added that fiscal policy should play a more significant role in order to stimulate the growth. In a long term period low interest rates encourage investors to take risks, that could be excessive.
It should be noted that forex brokers in Canada are also carefully paying attention to the situation taking place in the country. Some of them see it as an opportunity.
She also added that the central bank is looking closely at how the monetary policy interacts with fiscal levers.
Coronavirus impact on Canada
In the second quarter of 2020, the Canadian economy contracted by a record 11.5% from the previous quarter and entered a recession due to the coronavirus, the country’s statistics office said. In annual terms, Canada’s GDP in April-June fell by 38.7%, and this is also a record.
Analysts predicted a 12% contraction in the economy, Trading Economics reminds. In the first quarter, GDP fell by 2.1%.
Experts on average predicted an annual decline in the economy in the II quarter by 39.6%. In the first quarter, the economy contracted by 8.2% in annual terms.
Household spending plunged in the second quarter by a record 13.1% amid job losses and limited spending opportunities due to store closures and travel restrictions.
Business investments in fixed assets decreased by 16.2%, the maximum since the beginning of the indicator. Government spending fell 2.7% after cutting 0.3% in the first quarter.
Exports collapsed by 18.4%, imports – by 22.6% amid the fall in the economies of the country’s largest trading partners in connection with measures aimed at combating the pandemic.
There have been more than 128,000 cases in Canada and the death toll stands at 9,126. The pandemic is still far from over to be defeated in the world.