Just a less than an hour ago the Bank of Canada announced it’s cut to the overnight lending rate to 0.5% from the already historically low rate of 1%. This will further cut the Bank Rate down to 3/4 per cent as we are already seeing lenders reduce their own prime rate down by 0.5% to 2.5%.
With the outlook for the global economy continuing to deteriorate since the Bank’s last Monetary Policy Report Update in January, this is proving to be a challenging time for the Canadian economy. A weak automotive and housing sector with weaker-than-expected activity in major economies is a major factor effecting us at this moment in time.
Our current plan of action will not see results until the stabilization of other countries financial systems. You will see the funding of financial institutions in some major countries as maneuver to help off set their own economies but this will take time.
On a more timely note, our aggressive monetary and fiscal policy actions in Canada, as well as other major economies, is expected to create a visible change by the second half of this year. There are positive predictions that strength in our economy is expected to build through 2010.
With the next announcement for the overnight target rate expected on April 21st 2009 the Bank of Canada left on a positive note stating that once the global financial system stabilizes and global growth recovers, that with the early measures our economy has taken, we are expecting a more rapid recovery in our economy than most other industrialized economies.
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