By Alex McCuaig

Quantitative Easing

BoC drops key interest rate as part of quantitative easing

Mar 28, 2020 | 10:05 AM

MEDICINE HAT, AB – The Bank of Canada’s drop in its key interest rate should grease the wheels of the national economy seized by the COVID-19 pandemic, according to a Medicine Hat investment advisor.

On Friday, the Bank of Canada cut its interest rate to a quarter of a percent, the lowest it’s been in more than a decade, said Matt Solberg, investment advisor with TD Wealth Management, adding it’s part of the quantitative easing measures being put in place.

“The central bank of Canada is going out to the open market and buying securities, buying provincial bonds, municipal bonds, bankers’ paper,” said Solberg. “They’re buying those products and that is essentially injecting cash into the economy.”

The result is there should be loans available to small businesses and individuals at lower rates to allow bridge financing to get the country over the current crisis.

“The easiest way to say it is quantitative easing is putting money into the system,” said Solberg.

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Solberg says there could also be opportunities to purchase stock in fundamentally sound companies who’ve seen their prices drop to bargain level prices after taking a beating in a market which has spared few investments.