Bank of Canada Cuts Interest Rates

  • 16 years ago
  • Uncategorized
23rd April, 2008 -The Bank of Canada cut its interest rate by half a point to 3% whilst noting that further cuts might be necessary. The slowdown in the United States, which is Canada’s largest trading partner, has begun to affect the Canadian economy. This has helped to spur the Canadian central bank to make these cuts.
The Bank said in a statement: “The Bank is now projecting a deeper and more protracted slowdown in the U.S. economy. This has direct consequences for the Canadian economic outlook, with declining exports projected to exert a significant drag on growth in 2008.” It continued, indicating that “Some further monetary stimulus will likely be required.”
It is the fourth time Canada’s central bank has cut the overnight rate in less than five months. The Bank projects growth at 1.4 percent this year and 2.4 percent next year, a significant downward revision from last January’s modest growth expectations of 1.8 percent and 2.8 percent.
While it is taking these actions, the bank also noted that Canada’s economy was still being helped by high commodity prices and a strong domestic economy. After the Canadian dollar soared to values well over one US dollar late in 2007, it has since hovered around the one dollar mark. This is still a high value for the Canadian dollar, which in recent decades has been valued at well under the US dollar. Canadians now have a distinct advantage when purchasing goods from over the border, including property and real estate.

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