Bank of Canada Cuts Rates Due to Trade War

The trade war between US and China is causing trouble for banks not only in their respective regions but for the rest of the world.

The Bank of Canada is reported to cut its lending interest rate this October as the economic growth slows down due to trade war.

According to Bloomberg, the rate will be steady at 1.75 percent for the rest of the year. The decision of reducing the fees is due to the slowing down of US economic growth. The intense trade policy tensions have been affecting businesses and new investments as some materials and manpower come from China.

“Investors are right to price in lower interest rates from the Bank of Cana but the single 25 basis point cut priced into futures markets for the next 12 months does not go far enough,” said Senior Canadian Economist Stephen Brown.

Other banks are joining the ‘rate-cutting’ party

Aside from the Bank of Canada, JPMorgan Chase & Co. is also reducing its interest rate for financial products and services. As the second quarter approaches, the bank receives a lower growth of 1.5 percent coming from last year’s 2.25 percent.

Meanwhile, the Reserve Bank of Australia is also pushing for a lower interest of record-breaking 1 percent. According to DailyFX, the bank’s cash rate became lower as a result of the on-going trade truce between the two big nations. The Australian dollar is expected to face lower value as the interest rate can affect it.

US Federal Reserve is also expected to cut rates of about 25 basis points in the second quarter of 2020. The reversal of rates is possible, now that trade tension is still on-going.

In other news, President Donald Trump is reported to be meeting with China’s President Xi Jinping over this weekend to negotiate with trade terms. If things will turn out great, tariffs for both the US and Chinese products will go lower.