Central bank warns U.S. turmoil a risk

September 6, 2008

bus7.gifSays interest rate already low enough to stimulate economy

HEATHER SCOFFIELD, ECONOMICS REPORTER

September 4, 2008

OTTAWA — The Bank of Canada held its key interest rate steady, saying rates are already low enough to stimulate a stagnant economy that remains vulnerable to economic and financial turmoil in the United States.

The central bank’s decision yesterday to keep its overnight rate at 3 per cent maintains its benchmark rate a full percentage point higher than the U.S. Federal Reserve Board’s key rate. But compared with other countries, and once inflation has been taken into account, that rate is considered quite stimulative, spurring consumers to spend instead of save. Read more