Bank of Canada lowers overnight rate target by 1/4 percentage point to 2 1/4 per cent

The Bank of Canada lowered its key lending rate 0.25% today. This was an expected cut by most people, although lower than expected.

From the Bank of Canada Statement issued today the cuts were a result of:

"Three major interrelated developments are having a profound impact on the Canadian economy. First, the intensification of the global financial crisis has led to severe strains in financial markets. The associated need for the global banking sector to continue to reduce leverage will restrain growth for some time. Second, the global economy appears to be heading into a mild recession, led by a U.S. economy already in recession. Third, there have been sharp declines in many commodity prices. The outlook for growth and inflation in Canada is now more uncertain than usual."

We are now waiting to see how much of the rate decrease will be passed on to consumers by the major banks.

The Bank of Canada's next scheduled date for announcing the overnight rate target is 9 December 2008.

Read the Bank of Canada Statement Here