Bank of Canada lowers rate to 0.5 percent

Lending rates fell in Canada Tuesday after the Bank of Canada cut its central lending rate to 0.5 percent from 1 percent, the lowest ever.

The country’s major banks all issued releases saying they were lowering their prime rates to 2.5 percent, effective Wednesday.

In a statement issued in Ottawa, the central bank said the global economy had deteriorated further since January among major countries.

The nature of the U.S. recession, with very weak auto and housing sectors, is particularly challenging for Canada, the statement said.

The bank also called for other countries to step up recovery efforts.

Stabilization of the global financial system remains a precondition for the global and Canadian economic recoveries, the statement said. The timely implementation of ambitious plans in some major countries to address toxic assets and recapitalize financial institutions will be critical in this regard.