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Bank of Canada chops borrowing costs to 50-year low
' r" r+ S8 E/ oLast Updated: Tuesday, December 9, 2008 | 9:28 AM ET Comments80Recommend83
" m. G$ }1 f& U8 v0 wCBC News
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7 `( S8 ~( ~6 }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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2 r, ]# }0 @* ^/ u1 |* C6 Z, tWith 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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# p% S- f, X- P* ]"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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4 s, H, @. e: l- y% Y0 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.
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2 ?5 N, m: ^' pIn 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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