The Bank of Canada, confronted by fears of a U.S. recession, reduced interest rates Tuesday by one-quarter of a percentage point.
The Canadian central bank's scheduled decision came less than an hour after the U.S. Federal Reserve Board announced a three-quarter-point cut in its benchmark policy rate.
The Canadian bank's 25-basis-point move was widely expected, and it made clear that more cuts are coming. It is the second consecutive cut for the Bank of Canada, and marks the first time it has had back-to-back reductions since 2004.
"The bank has decided to lower the target for the overnight rate and further monetary stimulus is likely to be required in the near term," it said in a statement.
The bank said the Canadian economy slowed in the fourth quarter. It said the weaker U.S. outlook will cut into Canadian exports and overall growth will be weaker than previously projected, but will regain strength in 2009.
"Financial market conditions have deteriorated since October, leading to a tightening of credit conditions in industrial countries," it said.
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