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Bank of Canada chops borrowing costs to 50-year low' D9 w1 W* d- k- @3 n
Last Updated: Tuesday, December 9, 2008 | 9:28 AM ET Comments80Recommend83( o6 S5 l: M! M7 W Y! T M
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.# W( @( s! x0 N- l/ r$ X, T
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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., i- O. t0 u' _+ a8 n( N; d
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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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S. y8 R, D7 h/ V: L! k+ g"The recent declines in terms of trade, real income growth, and confidence are prompting more cautious behaviour by households and businesses."9 Z6 O1 y. o7 V; n ^4 t2 Z
) \% X! v5 ?6 K6 W5 _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.
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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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