Canada cuts key interest rate
Canada’s central bank cut its benchmark interest rate by half a point, its biggest reduction since 2001, and signaled further reductions would be needed to offset a slump in exports to the U.S.
The Bank of Canada lowered its target rate for overnight loans between commercial banks to a two-year low of 3.5%. The last time the bank cut its rate by half a point was following the Sept. 11, 2001, terrorist attacks.
“Further monetary stimulus is likely to be required in the near term,” the central bank said Tuesday in a statement from Ottawa. Signs of economic slowdown in Canada are “materializing and, in some respects, intensifying.”
Tumbling exports to the U.S. will limit 2008 economic growth to a seven-year low of 1.8%, the central bank says, and have erased the country’s broad trade surplus for the first time since 1999.
The U.S. Federal Reserve has cut its key rate from 5.25% in August to the current 3% in an effort to help bolster the weakening U.S. economy.
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