Tuesday, December 09, 2008

Canada is now in a recession

I'll have more to say later about another whirlwind of a day on the political scene, including what seems like the end of the Liberal leadership race with a very noble decision by Bob Rae. I did for now though want to draw attention to this news:

Central bank says Canada in recession, slashes policy rate to 1.5 per cent
Source: The Canadian Press
Dec 9, 2008 9:20

OTTAWA _ The Bank of Canada slashed its key interest rate to the lowest level in half a century Tuesday in an aggressive move to help rescue an economy it now officially declares is in recession.

Central bank governor Mark Carney cut the trendsetting rate by three-quarters of a point to 1.5 per cent, the lowest since 1958.

It was the single biggest reduction in the overnight rate since October 2001 in the aftermath of the 9-11 terrorist attacks, and exceeded the expectations of most economists. The consensus private-sector forecast had been for a half-point cut.

But in a gloomy assessment of the Canadian and world economies, the central bank said the situation continues to deteriorate so rapidly that even more reductions to short-term interest rates may be necessary.

``The outlook for the world economy has deteriorated significantly and the global recession will be broader and deeper than previously anticipated,'' it stated.

``While Canada's economy evolved largely as expected during the summer and early autumn, it is now entering a recession,'' it added. ``The recent declines in terms of trade, real income growth, and confidence are prompting more cautious behaviour by households and businesses.''

Canada is in a recession, and the economic situation is worsening.

And because Stephen Harper and his Conservative government preferred political posturing to working with Parliament for real action on the economy, because he cowardly ran away and sought the prorogual of the House rather than face losing power to a coalition of progressive parties that was willing to take the action on the economy that's needed, because of that we will go until at least the end of January for the possibility of real and meaningful action.

The Bank of Canada says we're now entering a recession, and the Conservatives have given everyone an extra-long Christmas vacation. I hope the price Canadians end up paying for your "time-out" is worth it, Mr. Harper.

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sjw said...

slashes policy rate to 1.5 per cent

Great for borrowing, absolute shite for investing. I actually prefer a rate moderately higher for the lubrication of the old portfolio. What really needs to happen is for the banks to be made to lower their credit card interest rates as this is the area where many Canadians are bleeding to death. Not much chance of that happening I'm afraid.

Francesco said...

i thought harper said no recession and no deficit during the election...now it is a "technical recession" by deficit Jim...

Mark Richard Francis said...

Love those technical recessions as opposed to real recessions. In technical recessions, do we only technically lose jobs and have technical poverty? ;)

Ted Betts said...


With Harper, you only technically have a government.

Harper has not introduced a new bill in Parliament since the spring and after cancelling Parliament to avoid a confidence vote it will be almost a year before Harper actually tries to do anything for the economy, especially if he forces another election.