WORLD> America
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WORLD> America
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Canada cuts rates to 50-year low as recession hits
(Agencies)
Updated: 2008-12-10 10:39 Eleven of Canada's 12 primary securities dealers had forecast the bank would cut rates by a half point and only one had forecast a cut of three-quarters of a point. For January, dealers were evenly divided between forecasting a half-point cut and a quarter-point cut.
The lowest rate on record was in 1958 at 1.12 percent. At that time, the key rate was determined by treasury yields rather than being set by policy-makers at the bank. Fiscal Action On Hold The global downturn has driven down commodity prices, resulting in lower incomes in Canada and plunging consumer confidence, the bank said. Job losses in November were the biggest in 26 years. But Canada has a couple of factors working in its favor, it said. A depreciation of the Canadian dollar will offset some of the impact of the global recession, and ongoing and significant liquidity provision have led to improvements in money markets and overall credit conditions. The bank's move on Tuesday comes as the timing of government action to help stimulate the Canadian economy is uncertain because of political maneuvering in Ottawa. Prime Minister Stephen Harper won a rare suspension of Parliament last week to avoid a vote of confidence that the minority Conservative government was expected to lose. Parliament will resume on Jan. 26 and Harper has promised the government will deliver a budget on Jan. 27 that will include additional spending and other measures to stimulate the economy. Even so, the opposition parties have said they may seek to bring down the Conservatives and seek to form their own coalition government. |
