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Bank of Canada chops borrowing costs to 50-year low% f7 D( E6 ^# w3 i' f/ R1 \: @
Last Updated: Tuesday, December 9, 2008 | 9:28 AM ET Comments80Recommend836 K5 F5 A! a' _' h) l2 G" l$ Z) p
CBC News4 a' L1 Y; Q# W- ~ D
' E4 P: T0 `$ k9 [% mThe 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.. n* b1 U- A- E
3 e4 d" W# s# c* d' MWith 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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7 q: g) \+ \; L; O"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."" N, T, I* L$ r
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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.. l0 V; {: Y A D, q
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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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