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Bank of Canada chops borrowing costs to 50-year low
g' ]$ h1 c( i$ u3 hLast Updated: Tuesday, December 9, 2008 | 9:28 AM ET Comments80Recommend83/ [1 W {* l: X/ T% Q
CBC News2 Q& o# @( m5 j. f. d+ H
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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.
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+ D% t. X, J! x$ j* ]3 s/ t) ?5 z" pWith 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.
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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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4 V1 k# s8 }# F) a1 {* Q5 }2 f$ e/ T"The recent declines in terms of trade, real income growth, and confidence are prompting more cautious behaviour by households and businesses."; g# `0 [3 j/ S: T$ X$ I1 m' @
1 R! B) ? Y C+ n4 F: l! \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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