Tuesday, March 3, 2009

Bank of Canada cuts key borrowing rate again

Tuesday, March 3, 2009
CBC News

The Bank of Canada cut a key interest rate on Tuesday, dropping its target for the overnight rate by one-half of a percentage point to 0.5 per cent.

The rate cut had been widely forecast by economists. The bank has now reduced interest rates by four percentage points since it commenced the latest cycle of easing in December 2007.

The rate cut comes one day after Statistics Canada said the economy contracted at an annualized rate of 3.4 per cent in the last three months of 2008. The Bank of Canada had been projecting a 2.3 per cent rate of decline.

Monday's negative report left economists predicting a weaker first quarter this year, with annualized declines of five to six per cent forecast.

In its Jan. 22 update to its outlook on the Canadian economy, the Bank of Canada said real gross domestic product for 2009 is projected to decline by 1.2 per cent, followed by a rebound of 3.8 per cent in 2010.

Many critics charged the central bank's forecast was overly optimistic, but Bank of Canada governor Mark Carney has defended the outlook vigorously.

In the commentary accompanying Tuesday's rate decision, the central bank said data for the fourth quarter of 2008 and other indicators point "to a sharper decline in Canadian economic activity and a larger output gap through the first half of 2009 than projected in January."

note: With mortgage rates at the lowest level in more than 40 years, affordability is at an all-time high. Call me at 403-564-4518 if I can be of any assistance.

John Prince, Alberta licensed real estate agent, MaxWell City Central – Crowsnest Pass. Serving the Crowsnest Pass and area. Call me directly at 403-564-4518 or by email at: johnprince@shaw.ca

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