Skip to main content
The Globe and Mail
Support Quality Journalism
The Globe and Mail
First Access to Latest
Investment News
Collection of curated
e-books and guides
Inform your decisions via
Globe Investor Tools
Just$1.99
per week
for first 24 weeks

Enjoy unlimited digital access
Enjoy Unlimited Digital Access
Get full access to globeandmail.com
Just $1.99 per week for the first 24 weeks
Just $1.99 per week for the first 24 weeks
var select={root:".js-sub-pencil",control:".js-sub-pencil-control",open:"o-sub-pencil--open",closed:"o-sub-pencil--closed"},dom={},allowExpand=!0;function pencilInit(o){var e=arguments.length>1&&void 0!==arguments[1]&&arguments[1];select.root=o,dom.root=document.querySelector(select.root),dom.root&&(dom.control=document.querySelector(select.control),dom.control.addEventListener("click",onToggleClicked),setPanelState(e),window.addEventListener("scroll",onWindowScroll),dom.root.removeAttribute("hidden"))}function isPanelOpen(){return dom.root.classList.contains(select.open)}function setPanelState(o){dom.root.classList[o?"add":"remove"](select.open),dom.root.classList[o?"remove":"add"](select.closed),dom.control.setAttribute("aria-expanded",o)}function onToggleClicked(){var l=!isPanelOpen();setPanelState(l)}function onWindowScroll(){window.requestAnimationFrame(function() {var l=isPanelOpen(),n=0===(document.body.scrollTop||document.documentElement.scrollTop);n||l||!allowExpand?n&&l&&(allowExpand=!0,setPanelState(!1)):(allowExpand=!1,setPanelState(!0))});}pencilInit(".js-sub-pencil",!1); // via darwin-bg var slideIndex = 0; carousel(); function carousel() { var i; var x = document.getElementsByClassName("subs_valueprop"); for (i = 0; i < x.length; i++) { x[i].style.display = "none"; } slideIndex++; if (slideIndex> x.length) { slideIndex = 1; } x[slideIndex - 1].style.display = "block"; setTimeout(carousel, 2500); }

Canadian dollar

JONATHAN HAYWARD/THE CANADIAN PRESS

The Canadian dollar plunged more than 1 1/2 U.S. cents Wednesday after the Bank of Canada surprised markets with a quarter-percentage-point cut to its key short-term rate. The central bank also trimmed economic growth expectations for Canada because of the collapse in oil prices.

The bank had been universally expected to leave its rate unchanged at 1 per cent, where it had been since September, 2010. However, the bank dropped the rate to 0.75 per cent and said "the oil price shock increases both downside risks to the inflation profile and financial stability risks."

The loonie tumbled 1.53 cents to end at 81.07 cents (U.S.) – its lowest level since late April, 2009. It was a second day of heavy losses. A combination of falling oil prices, a weak manufacturing report and an economic downgrade from the International Monetary Fund pushed the loonie down more than 1 cent on Tuesday.

Story continues below advertisement

Oil prices have plunged 55 per cent since last June amid a glut of supply and have fallen about 40 per cent just since the end of November after the Organization of Petroleum Exporting Countries concluded its last meeting with a vow to leave production levels unchanged.

The Bank of Canada said it was projecting real gross domestic product growth will slow to about 1.5 per cent in the first half of this year.

It added that the negative impact of lower oil prices "will gradually be mitigated by a stronger U.S. economy, a weaker Canadian dollar, and the bank's monetary policy response."

The bank added that it expects Canada's economy to gradually strengthen in the second half of this year, with real gross domestic product growth averaging 2.1 per cent in 2015 and 2.4 per cent in 2016.

It said the economy is expected to return to full capacity around the end of 2016, a little later than was expected in October.

Crude oil prices were higher Wednesday ahead of the latest inventory figures from the U.S. Department of Energy. The March contract in New York gained $1.31 to $47.78 a barrel.

Metals were mixed with March copper up 2 cents at $2.61 pound, while February gold bullion faded 50 cents to $1,293.70 an ounce.

Story continues below advertisement

Meanwhile, there was increasing clarity over what the European Central Bank may deliver in the form of another round of economic stimulus on Thursday.

The Wall Street Journal reported that the board of the European Central Bank is proposing a substantial program of quantitative easing, which involves a massive round of government bond purchases. The WSJ said the bank would spend about €50-billion ($71-billion Canadian) monthly on the program. Markets had been speculating the central bank would announce a program involving spending between €500-billion and €700-billion annually.

Economic growth has been tepid and there have been worries that the region could fall prey to deflationary pressures, a situation where businesses and consumers hold off on purchases in the hope that items will just get cheaper.

Report an error
Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to feedback@globeandmail.com. If you want to write a letter to the editor, please forward to letters@globeandmail.com.

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff.

We aim to create a safe and valuable space for discussion and debate. That means:

  • Treat others as you wish to be treated
  • Criticize ideas, not people
  • Stay on topic
  • Avoid the use of toxic and offensive language
  • Flag bad behaviour

Comments that violate our community guidelines will be removed.

Read our community guidelines here

Discussion loading ...

To view this site properly, enable cookies in your browser. Read our privacy policy to learn more.
How to enable cookies