Canada's Key Rate Drops 1/2%

The Bank of Canada has trimmed it's overnight target rate by 1/2%.  That puts it at 1.00%, an all-time low.

There were various points of note in the BoC's official statement:

• Canada is now "in recession" says the Bank.
• Our economy has worsened since the BoC's last meeting in December.
• Canada's economy should continue to retract through mid-2009.
• The Bank expects GDP to drop 1.2% in 2009 (the first annual drop since 1991) but rebound by a vigorous 3.8% in 2010.  It calls for a return to normal 2% inflation by the "first half of 2011."
• The Bank expects "modest decreases in housing prices" through 2009.
• There are "signs" the global financial system is improving.
• The Bank underscored that "low, stable, and predictable inflation" is its main objective, and that it will "monitor carefully economic and financial developments in judging to what extent further monetary stimulus will be required."

The Bank of Canada has now cut rates by a total of 3.50% in the last 13 months.

The Bank's next scheduled interest rate announcement is March 3.

We'll be back later today to report on any movement among the big banks' prime rates.