Canada cuts key rate to insure against negative impact of oil price plunge

Ottawa

THE Bank of Canada unexpectedly cut its main interest rate, saying the oil-price shock will drag down inflation and weigh on everything from exports to business and consumer spending.

The bank cut its rate on overnight loans between commercial banks by a quarter percentage point to 0.75 per cent, a decision none of the 22 economists in a Bloomberg News survey predicted. The rate, which influences everything from car loans to mortgages, had been at one per cent since September 2010. The last cut was in April 2009.