In a shock move, the Bank of Canada cut its benchmark rate on Wednesday to counter the effects of cheaper oil on economic growth and inflation and to try to prevent financial instability that could result from a vulnerable housing market.
Ending the longest period of unchanged rates since 1950, the central bank cut the overnight rate to 0.75 percent from 1 percent, where it had been since September 2010, and it dramatically slashed the inflation and growth profile for the coming year.
“The considerably lower profile for oil prices will be unambiguously negative for the Canadian economy in 2015 and subsequent years,” the central bank said in its quarterly Monetary Policy Report.
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