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Bank of Canada chops borrowing costs to 50-year low# @# T C2 ~7 x# n
Last Updated: Tuesday, December 9, 2008 | 9:28 AM ET Comments80Recommend83
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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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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.( H0 _$ X9 o" Y6 k( k4 C
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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.8 ~$ n# c# u& ^! P
4 [ K( T# d" g9 f4 k"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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* @" X+ \" r& P0 e3 S- s4 rEconomists had been divided over whether the central bank would cut by one-half of a percentage point or go with a more aggressive reduction.) T3 i8 J) \0 R, m: R
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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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