Bank Rate Lowered by ¼ Percentage Point to 5¾ Per Cent

The Bank of Canada today lowered its Bank Rate by ¼ of one percentage point to 5¾ per cent. The Bank's operating band for the overnight rate was similarly adjusted to a range of 5¼ to 5¾ per cent.

This decrease in short-term interest rates follows today's move by the U.S. Federal Reserve to lower the federal funds rate by ¼ of one percentage point to 5¼ per cent. The action by the Federal Reserve was taken to cushion the effects on the U.S. economy of international developments and domestic financial conditions. The implications of these international and U.S. developments, as well as Canada's good underlying inflation performance, warrant a reduction in Canadian short-term interest rates.

Since late August there has been an increase in confidence in Canadian financial markets with a firmer Canadian dollar and lower medium- and long-term interest rates. These developments have also contributed to the expectations in financial markets of a decline in overnight interest rates.