Bank of Canada Cuts Rate by .5%

The Bank of Canada lowered its benchmark rate by half a point to revive an economy that’s growing at its slowest pace in 16 years, and signaled more easing may be needed. Governor Mark Carney and his five deputies cut the rate on overnight loans between commercial banks to 3 percent, the lowest since December 2005, a move predicted by 28 of 32 economists in a Bloomberg News survey.

The projections for growth and inflation in the central bank’s statement today indicate policy makers may ease again as soon as their next meeting on June 10, economists said. The bank cut its 2008 growth forecast to 1.4 percent, the lowest since 1992, from a January prediction of 1.8 percent, and said inflation will stay below their 2 percent target until 2010.

“The main concern for the Bank of Canada is that economic growth is going to be well below potential,” said Craig Alexander, deputy chief economist at TD Bank Financial Group in Toronto. The bank today sent “quite a strong signal,” he said, “and we expect another rate cut at the next meeting.”