Bank of Canada Governor Stephen Poloz said the level of collaboration among Group of Seven central banks is extremely high, even as each nation tackles the coronavirus crisis in its own way.
The central bank chief also said the emergency half-percentage-point cut by the U.S. Federal Reserve on Tuesday influenced Canada’s decision to follow suit a day later.
“Let me assure you that the level of coordination is as a high as I’ve experienced in my time as governor,” Poloz said Thursday at a press conference in Toronto, when asked about the degree of unanimity among G-7 nations grappling with the potential economic shock of the virus.
The Bank of Canada cut its benchmark interest by 50 basis points at a scheduled decision Wednesday. Poloz acknowledged the Fed’s surprise move Tuesday “mattered” to Canadian policy makers.
“There is in effect a coordination premium that you get by acting in concert,” Poloz said. “To us that was also a positive benefit — the fact that the Fed went on Tuesday and we knew we were going the very next day.”
Poloz also pointed out that not all countries have the same scope to adjust their policy, and that not all central banks or governments can move in the same manner or at the same time. “Some central banks have more room to maneuver than others, so that of course is a constraint,” he said.
“When it’s coordinated you get an outsized reaction because it’s more confidence-inspiring when other entities are doing the same thing.”
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