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Bank of Canada chops borrowing costs to 50-year low
7 S; ]) S, ?7 D8 a+ BLast Updated: Tuesday, December 9, 2008 | 9:28 AM ET Comments80Recommend83
* u* }5 G* ~1 V0 `+ L7 g3 zCBC News
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5 W7 L& g- R8 o9 L8 M. g4 gThe 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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& y4 t0 {/ c2 Q t. bWith 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.# ^, O$ P! |) v0 S7 B' M- y
6 L9 A) f8 x, X3 m4 h- w"The recent declines in terms of trade, real income growth, and confidence are prompting more cautious behaviour by households and businesses."- J' l' a% [3 \% B! S) s
: _0 y, E' w) p9 n+ [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.
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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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