While acknowledging that the outlook is too uncertain at this point to provide a complete forecast, the Canadian central bank said it expects Canada's economic activity to be lower by 1 to 3 percent in the first quarter of 2020, and 15 to 30 percent lower in the second quarter compared to the fourth quarter of 2019.
"Despite a high level of uncertainty, these estimates suggest that the near-term downturn will be the sharpest on record," the bank said. It also expects inflation to be close to zero in the second quarter of 2020 primarily due to lower gasoline prices.
The bank said it has taken several measures to stabilize Canada's monetary and banking system, including lowering its target for the overnight rate 150 basis points over the last three weeks.
It has also lent money to financial institutions and bought assets in core funding markets to the tune of 200 billion Canadian dollars (about 142 billion U.S. dollars).
The central bank will continue supporting the Canadian government's bond market by purchasing at least 5 billion Canadian dollars in federal securities per week and will increase its purchases if necessary.
The bank also announced a new Corporate Bond Purchase Program, in which the bank will acquire up to a total of 10 billion Canadian dollars in investment grade corporate bonds in the secondary market.
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