Bank of Canada cuts interest rate to record low of 0.5 percent

The Bank of Canada has cut interest rates as expected to the lowest on record, which is a further indication that the Bank of Canada may be using a different policy rather than just cutting interest rates in order to stimulate growth.

The result of the cut is that the currency has reached a three-month low as some currency players have been frightened off by the Canadian dollar, according to Eric Lascelles, chief economics strategist at TD Securities Inc.

Mark Carney, the Governor of the Bank of Canada, cut interest rates from 1 percent to 0.5 percent yesterday and revealed indications that they may lower it again if needed.

The Governor also announced that the Bank may follow the route of credit and quantitative easing in order to increase the money supply by buying up government securities so that banks can be left to increase lending.

As part of his statement, Carney said that the bank would be clear and transparent if unusual measures were needed to be taken but the financial system continued to function and the economy was in a healthier state than other G7 nations.

As part of the next step in dealing with the current economic climate, economic and financial developments will be monitored.

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