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Bank of Canada chops borrowing costs to 50-year low
* }. A( W& p+ z+ cLast Updated: Tuesday, December 9, 2008 | 9:28 AM ET Comments80Recommend83& T t7 g( Q& I4 ? A
CBC News( O, g. {) o8 D6 Y! `6 }! j
* b" U n/ J H* H6 E% t1 _, EThe 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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, s. D& T9 u* ^; @9 R4 uWith 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, e. v2 m' N* e1 v
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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.6 o5 A, L) A7 M" o4 |1 ?
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"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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3 u( n# D+ V- r0 _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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3 @$ }8 G+ d1 n2 Z. X" eIn 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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