Canada's rate at half-century low

Canada's central bank hopes monetary policies will encourage consumption

Canada's central bank has cut interest rates to their lowest level in 50 years, to 1.5%, in an effort to stem recession and support economic growth.

The rate cut, by 0.75%, is the largest since the aftermath of the terrorist attacks on 11 September 2001.

The central bank said the global recession would be broader and deeper than previously anticipated.

But it added that strong action by governments worldwide was beginning to rebuild trust in money markets.

"Global financial markets remain severely strained," Canada's central bank said in a statement.

It also noted that slowing demand was severely hitting consumption.

"The recent declines in terms of trade, real income growth, and confidence are prompting more cautious behaviour by households and businesses."

The Canadian government has launched a 25bn Canadian dollar ($19bn; �13bn) bail-out package that would allow them to buy mortgages from troubled banks.

Canada's economy is closely tied to that of the United States, its biggest export market, which has been in recession since the end of 2007.

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