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Canada cuts rates by 3/4 percent
The Bank of Canada has dramatically cut its key interest rate by a hefty three-quarters of a percentage point, blaming a “broader and deeper” global slowdown for driving Canada into recession.
The central bank’s overnight lending rate now stands at 1.50 per cent, a generational low and the likes of which have not been seen since the 1950s.
In response, however, Canada’s major banks cut their prime lending rates by only half a percentage point, to 3.5 per cent, rather than following with a full three-quarters of a point reduction.
Canada’s central bank joins a host of other central banks in making larger-than-usual rate cuts as their economies quickly fall victim to a stunning slowdown in global demand, led by a deeply troubled U.S. economy.
“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 in its first clear-cut declaration of a country in recession.
John Polomny
The Real Deal
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