The Bank of Canada cut interest rates for the first time in almost five months yesterday, citing the combined impact of a soaring loonie (Canadian dollar) and weaker-than-expected demand on this country's recovering economy, and economists say the door remains wide open for more moves if the picture doesn't brighten.
The move lowers the central bank's key target for the overnight rate to 2.5 per cent, from 2.75 per cent.
The market had been primed for another rate cut, the first since September, although economists were fairly evenly split on whether the bank would move.
"Despite stronger global economic growth, the rapid appreciation of the Canadian dollar against the US currency has cut into the overall growth of aggregate demand for Canadian goods and services through weaker exports and increased imports," the central bank said.
