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Bank of Canada chops borrowing costs to 50-year low3 Z- H3 v& e6 t$ u T
Last Updated: Tuesday, December 9, 2008 | 9:28 AM ET Comments80Recommend83
4 h* s4 j/ k) i |! ]CBC News0 c# h. }7 n0 U7 }3 D F/ P- o. `5 i
( o+ }' u5 l/ x$ K. S6 PThe 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.. h' A2 b, L- v" P; a- y% A+ \
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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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2 {& T2 P" R) K$ A"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."% E; Q2 @3 `/ ]4 X% s& q5 i2 V
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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.) }3 {% Q7 F9 f& s$ z3 g+ e. G
0 O- }2 U/ Q) E9 L8 F/ r2 q& cIn 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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