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Bank of Canada chops borrowing costs to 50-year low
* k; b ~4 W1 `Last Updated: Tuesday, December 9, 2008 | 9:28 AM ET Comments80Recommend830 p; v' N5 }3 J0 f/ D5 D
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.$ k1 s+ O3 f: V. `- T
2 F3 T) m' U# H' Q# j# z1 b: ?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.
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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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: I7 W$ P& S2 L! Z2 F"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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( C7 C7 R2 Q# H6 [. u# pEconomists had been divided over whether the central bank would cut by one-half of a percentage point or go with a more aggressive reduction.; y* F$ c l6 N4 X" e
3 C% A6 `* p5 i d F: k' [* FIn 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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