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Bank of Canada chops borrowing costs to 50-year low
8 M* W$ K$ I& Y. V1 {; k, ~: n8 CLast Updated: Tuesday, December 9, 2008 | 9:28 AM ET Comments80Recommend838 J9 ?. r3 L* j( I
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.
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& _3 f0 L P7 I8 P5 r' i( h; R" mWith 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. C) x) X6 k: o8 {5 x, C; L
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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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1 I/ {5 f; l+ s, y; T"The recent declines in terms of trade, real income growth, and confidence are prompting more cautious behaviour by households and businesses." K) V- m" b2 A/ T$ A4 |1 p+ e
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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.# T: D9 W: ~$ ?* ]6 \9 U: u" n
! n. t( C6 f/ H( gIn 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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