US Economy Tumbles Bank Of Canada Rate

As the US recession appears to settle in ever more firmly, the Bank of Canada slashed its overnight rate yesterday by 0.5 basis points to 3.5%, the first such move in six years.

A quarter-point cut earlier in the year was not enough to ease fears of a global spillover effect as analysts predict a long hard trough for the US economy, fueled largely by a spiralling housing market.

The big Canadian banks soon announced corresponding cuts to their prime rate, bringing it to 5.5%, all of which is good news for northern mortgage-holders, who can expect to see more rate cuts by summer, with some predicting yet another half basis point cut.