Bank of Canada cuts interest rates to 0.25%
April 21, 2009‐ Ottawa, Canada
Canada's central bank, The Bank of Canada" href="/financial/bank-of-canada.htm">Bank of Canada cut interest rates to an historic low of 0.25%. The bank said that it would maintain its benchmark overnight-lending rate for 14 months. Sweden's central bank also halved their interest rates to 0.5% which would remain at this low level until the beginning of 2011. This is a positive news for the markets as the Toronto Stock Exchange climbed 121 points to close at 9247.17. However, William Holland, Chief Executive of CI Financial Corp. downplayed the lowering of interest rates and said further steps are necessary.
Bank of Canada Quotes
"With monetary policy now operating at the effective lower bound for the overnight policy rate, it is appropriate to provide more explicit guidance than is usual."
"Conditional on the outlook for inflation, the target overnight rate can be expected to remain at its current level until the end of the second quarter of 2010."
Eric Lascelles, economist with TD Securities, Toronto - Quotes
"A central bank loves to have minimal market volatility, but the risk is what they think will happen might turn out to be wrong,"
"That tends to change every quarter, so this is not quite an iron-clad commitment,"
Craig Alexander, economist with TD Bank Financial Group, Toronto - Quotes
"It's unprecedented for them to come out and say this,"
"It's a very powerful message to the bond market to not expect rates to come up."
"Central banks are forced to pull more rabbits out of their hats to deal with the current conditions,"
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