Canada – Interest rate drops to another record low as a recession is feared

The Canadian dollar has plunged to its lowest point since 2009, and the country’s clouded political future became even murkier as the Bank of Canada dropped its key interest rate to a record low for the second time this year, confirming that the national economy is shrinking as the country heads into an election.

Bank governor Stephen Poloz carefully avoided using the word “recession” as he announced the rate cut on Wednesday, bringing the central bank’s overnight lending rate down 25 basis points to 0.5%. But the indicators that inspired the move showed that the economy had shrunk for the second quarter in a row, meeting the standard definition of recession.

“Global economic developments have been quite disappointing,” said Poloz. “Canada’s economy is undergoing a significant and complex adjustment.”

But the government’s critics laid the blame for the decline with Stephen Harper’s governing Conservative party. “We’re the only G7 country to be in recession in 2015,” shadow finance minister for the Liberal party Scott Brison told the Guardian. “What’s clear is that Harper’s only plan – tax cuts for the rich and cuts in social services – is not working.

“Harper’s economic record is in tatters,” he added.

Adding to the discomfort, Poloz’s announcement came just days after US Federal Reserve chair Janet Yellen suggested interest rates south of the Canadian border could be raised before the end of the year.

Chosen excerpts by Job Market Monitor. Read the whole story at Canadian recession fears grow as interest rate drops to another record low | World news | The Guardian.

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