Canada reduces interest rate by half a point to 3.00%. | CountingPips Forex & Currency Trading Blog

April 22, 2008 - Forex Economic News

Canada reduces interest rate by half a point to 3.00%.

The Bank of Canada lowered its interest rate today by half a percentage point to 3.00 percent. The rate cut was widely expected by economic forecasts and comes after the Bank lowered their rate by half a percentage point in March and a quarter percentage point each in January and December. The Bank of Canada cited weakening export growth, a global economic slowdown and inflationary pressures within Canada at acceptable levels as reasons for the rate cut. The economic slowdown in the U.S. and a rise in the Canadian dollar has hampered Canadian export growth as the U.S. is Canada's largest export destination.

The report stated, "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. In addition, tightening credit conditions and softening sentiment are expected to moderate business investment and consumer spending. Nevertheless, domestic demand is projected to remain strong, supported by firm commodity prices, high employment levels, and the effect of cumulative easing in monetary policy."

The Bank may not be done cutting rates as it commented in the report that "some further monetary stimulus will likely be required to achieve the inflation target over the medium term." The next rate decision for the Bank of Canada is coming on June 10.

Tags: canada interest rate, bank of canada, cad

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