Masthead graphic based on a painting by Gudrun Thriemer.

Tuesday, January 20, 2009

"Bank of Canada lowers overnight rate target by 1/2 percentage point to 1 per cent," Bank of Canada, January 20, 2009.

OTTAWA – The Bank of Canada today announced that it is lowering its target for the overnight rate by one-half of a percentage point to 1 per cent. The operating band for the overnight rate is correspondingly lowered, and the Bank Rate is now 1 1/4 per cent.

  Total CPI inflation is expected to dip below zero for two quarters in 2009, reflecting year-on-year drops in energy prices.

The outlook for the global economy has deteriorated since the Bank's December interest rate announcement, with the intensifying financial crisis spilling over into real economic activity. Heightened uncertainty is undermining business and household confidence worldwide and further eroding domestic demand. Major advanced economies, including Canada's, are now in recession and emerging-market economies are increasingly affected. Energy prices have fallen as a result of substantially weaker global demand.

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