The Bank of Canada cut its key policy rate by 50 basis points today, to a record low of only 1.0, and left the door open to further reductions in the coming months. The close financial and trade links between Canada and the United States mean that there was never any realistic hope of the former escaping the same recessionary fate. Even with the Bank of Canada slashing interest rates and a sizeable fiscal stimulus on the way, we expect the economy to shrink by 2% this yea, almost double the size of the contraction projected by the Bank.
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