The Bank of Canada has today cut its benchmark interest rate to 1.25% from 1.75% in the face of a fast-spreading coronavirus outbreak and said it was prepared to cut again if needed to support economic growth.

The central bank said the outbreak was "a material negative shock" to the Canadian and global outlooks.

It predicted that as the coronavirus spread, business and consumer confidence would deteriorate, further depressing economic activity. 

"As the situation evolves, the bank's Governing Council stands ready to adjust monetary policy further if required to support economic growth and keep inflation on target," the bank said in a statement. 

The move marked the first time in almost five years that the Bank of Canada had eased rates. 

The last time it cut by 50 basis points was in March 2009 during the global financial crisis.  

The US Federal Reserve cut rates by half a percentage point in an emergency move yesterday designed to shield the world's largest economy from the impact of the coronavirus. 

The Bank of Canada said that while markets continued to function well, it would continue to ensure the Canadian financial system had sufficient liquidity. 

Unlike other nations, Canada has only reported a handful of people with the virus. 

"It is likely that as this virus spreads, business and consumer confidence will deteriorate, further depressing activity," the bank said, noting the Canadian dollar and commodity prices have depreciated. 

The bank had held rates steady since October 2018. 

Canada is a major exporter of commodities, including oil, which has seen prices slump in recent months. 

Last week, Statistics Canada reported the country's annualised economic growth had slowed to 0.3% in the fourth quarter, the worst performance in almost four years. 

The bank said it was becoming clear that the first quarter of 2020 would be weaker than it had expected. 

"The drop in Canada's terms of trade, if sustained, will weigh on income growth. Meanwhile, business investment does not appear to be recovering as expected," it said.