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Bank of Canada chops borrowing costs to 50-year low2 p8 f; g9 f1 W. S1 F% Q! F
Last Updated: Tuesday, December 9, 2008 | 9:28 AM ET Comments80Recommend83) }' g4 j3 Y# b. `8 Z& n2 _: s
CBC News
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The Bank of Canada chopped a key interest rate by three-quarters of a percentage point on Tuesday as the central bank moves to combat economic weakness. l' M8 w/ Y5 Q1 J/ p, A5 [4 ]
0 z, P9 G) W( M( P# k7 N ^With the interest rate reduction — which was the biggest drop since one of a similar size in October 2001— the bank's overnight rate now stands at 1.5 per cent, a level not seen since 1958.( ]. o* R9 S7 ?8 C4 W: S- I3 z
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"While Canada's economy evolved largely as expected during the summer and early autumn, it is now entering a recession as a result of the weakness in global economic activity," the bank said.
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7 K5 R5 q3 l$ X"The recent declines in terms of trade, real income growth, and confidence are prompting more cautious behaviour by households and businesses."
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Economists had been divided over whether the central bank would cut by one-half of a percentage point or go with a more aggressive reduction.6 H" r* A0 s6 c# t/ Z5 F
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In the wake of the Bank of Canada's decision, the Canadian dollar was trading down 0.93 of a cent to 78.81 cents US. |
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