Canada's economy crumbled in
late 2008, with real GDP contracting
at the fastest pace in 17 years.
The slumping labour market and
housing slowdown point to the
economy continuing to contract in
the first half of 2009.
The Bank cut the policy rate
again in early March and said it is
considering implementing quantitative
or credit easing to ensure
that monetary policy stimulus is
The Bank of England (BoE) and
ECB also trimmed their policy rates
and the BoE launched a quantitative
BoE cuts rates; announces quantitative easing plan
The BoE cut the policy rate by 50 basis points in early March to 0.5% and announced that it would purchase financial assets financed by the issuance of reserves. The details of the plan showed the BoE intends to buy both corporate debt and government bonds, with the majority of assets purchased being medium and long-term Treasury debt.
Recessionary conditions, globally and in the U.K., were deemed to threaten an undershooting of the 2% medium-term inflation target necessitating the aggressive policy actions.
In the Eurozone, the ECB cut its policy rate by 50 basis points to 1.5%, the lowest in its 10- year history. While there was no overt talk of quantitative easing, ECB President Trichet did not rule out using new "non-standard measures" as forecasts for growth and inflation were cut back.