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Bank of Canada chops borrowing costs to 50-year low
, v; T8 d- i9 R. c2 S3 lLast Updated: Tuesday, December 9, 2008 | 9:28 AM ET Comments80Recommend83
0 ^$ f6 C+ n8 z, kCBC News: W) G) D. _: d3 ^) q1 y
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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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b5 \. D; m: X2 w8 H nWith 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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"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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; g6 a9 S; z- J: \! _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.8 a5 S2 |$ V1 |1 c' H, r& ^6 ] w. |
: Y3 {$ z4 a! t! E2 xIn 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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