Canada cuts its interest rates by 50 basis points

by Richard Kilner

Story link: Canada cuts its interest rates by 50 basis points

Today the Bank of Canada cut its overnight interest rate to 3.5%, a decrease of 50 basis points, the largest such cut since 2001.

The slashing of the interest rate has been taken as an indication that the central bank will make further such cuts in an effort to stave off the negative impact of the US slowdown.

The change is the first made under the leadership of the bank’s new governor, Mark Carney.

Carney cited the potential dangers accompanying the slowing of the US economy as the reasoning for the widely expected cut.

In total 100 basis points have fallen from Canada’s official interest rate since December, during which time the US Federal Reserve has slashed thrice as many.

The Bank of Canada has also stated that its initial predictions regarding the US economy were a little too optimistic, and that the housing slide will be deeper and more severe than initially thought.