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Bank of Canada chops borrowing costs to 50-year low
5 G6 {7 h- y6 _+ Q; c( M* K+ c* c j6 f$ mLast Updated: Tuesday, December 9, 2008 | 9:28 AM ET Comments80Recommend833 Q t- @. I1 B: E
CBC News* ]( Y8 ]0 F' r3 a: C) Q/ }9 \
( m: Q7 N, l# ]) {7 g A2 v# ~# NThe 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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! ~- e: u4 H/ ^$ E0 @( @5 i8 I$ Y2 xWith 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 1958.6 Q. u* s7 h H" R
! w& r% n7 L8 G3 J9 l$ {"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.; ]" H8 }. F, V$ }
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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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$ }! r/ L% D* f$ \ u& r( V! p# YEconomists 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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